In my opinion, The Source represents the interconnectness of all things. What you could call God, The Universe, or whatever word (to you) represents the single label that encompasses everything in existence. Some feel that the Universe has it's own enormous hivemind consciousness, one that is present in us all but hidden within the subconscious parts of our mind;
"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."
In buddhist theology, certain beings become 'englightened' after living many lives, and by definition see past the trap of desire and wanting, so when they die, they bypass the temptation of reincarnation that most other beings slip into (out of their longing to live again). Instead of reincarnating, they are absorbed into a larger form of being, existence as the entire Universe itself.
This could also be represented in the film;
"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."
I think The Matrix is one of the deepest and multi-leveled philosophical films ever made! I don't know if the Wachowski's really meant any of this stuff but even then, it's incredible how many metaphors can be seen from a single film.
That's a really interesting take on it, especially given the Hindu influence on the sequels (e.g. Rama Kandra, Kamala & Sati; lyrics from the Upanishads; the hovercrafts Avatar, Brahma, Ganesha, Shiva & Vishnu; the introduction to the Zion Archive by the Instructor in The Second Renaissance Part I, and the gold-code view of Neo being taken away by the Machines at the end of Revolutions).