Open source software refers to software with source code that is publicly accessible and can be modified. It offers benefits like freedom, security, flexibility and quality. Licensed software requires a license agreement and restricts private modification and redistribution. The main differences between open source and licensed software are that open source software can be obtained for free, modified, and installed freely on any system, while licensed software must be paid for, cannot be modified, and requires a license to install. Examples of open source software include Linux, Android, and Firefox, while licensed software includes Microsoft Office, Windows, and Adobe Photoshop.