You can only share the source code with other Unreal Engine licensee who is authorized to access the same version of the engine as yours, and if you copy and paste the Unreal Engine code into your own project or engine, the your product will be governed by the EULA and royalties will have to be paid.
TLDR: This is non-free. It is not open source, its not free software, and it is unlikely to ever exist in distributions like Debian and Ubuntu.
You're right, it's gratis. I highly doubt it'll satisfy the definition of free/open source software, as it'll (understandably) lack redistribution rights.
It's still a highly daring development model, all things considered. The concept itself is hardly new, but it's the first time an AAA developer has adopted it. Correct me if I'm wrong.
It also won't satisfy the definition of free/open source software in that the source code likely won't be available under an open-source license (though they're using GitHub, so maybe).
They didn't say word one about the code being open; just the development process and the progress they're making.
