The Source is believed to be the central computing core for the Machine mainframe.
In the Matrix film trilogy, the Source is also described as a location where programs that are no longer needed to operate within the Matrix are obligated to enter, whereupon they will be absorbed into the mainframe. While the Source is often described a singular tangible location, it may mainly refer to hive-link network to which all Machines entities, including programs, are directly connected towards.
Neo, a human and The One, is initially misled, as part of the Prophecy dictates that he utilized the Keymaker to reach the Source as part of his role in ending the Machine War. However, Neo only reached the Architect, a high-level program that either represented the Source or, as part of his role in preserving the Matrix, served to block The One from actually accessing the Source.
Later, Neo is once again redirected by The Oracle to go to the actual location of the Source in the Machine City. He succeeds in reaching the highly-defended city and meets with what was presumably another effective representative of the Source, the Deus Ex Machina. There, Neo succeeds in brokering a truce with the Machines in exchange for ridding the Matrix of a rogue program, Smith, who not only threatened the integrity of the Matrix, but the Machine City itself.