Like the earlier Half-life, Half-life 2 was a hit first-person shooter based on a 3d game engine that was advanced for its time. Also like the earlier Half-life, this engine was made available to third-party developers on both a commercial and community (free) basis.
The earlier Half-life engine had no particular name but the developers Valve decided to give a more public face to the Half-life 2 engine and it was titled Source. This engine has been used for several Valve projects now and has occasionally been updated with releases such as the wordy Half Life 2: Episode 2. The first modification of the engine was, appropriately enough, Counter-Strike Source which was in fact released by Valve before Half Life 2 due to complicated contractual obligations with the games publisher Vivendi. Today, there are many game modifications available in a wide variety of styles and settings and the most popular of these are occasionally hosted by Valve themselves and made available via their Steam distribution system. Valve's own official releases continue to use the engine and these includes such games as Left 4 Dead, Team Fortress 2 and Portal.
Source provides high quality 3d graphics with all the lighting effects, texture manipulation, physics simulation and modelling and animation that you will find in any recent 3d game. The engine also provides the network and client/server support that is essential to modern multiplayer games. The open availability of the Source engine has two significant implications, one is that small groups of games enthusiasts can produce professional quality games relatively quickly and essentially freely and the second is that game development shifts from being a technical task to much more of an artistic task.