It's a leaked copy of the System 7.1 source code - just the System itself; it doesn't include any applications, control panels, or extensions. (So code for things like the Finder or QuickTime aren't included.)

I'm not certain where it came from precisely; from what I understand, it's been circulating online for ages. Apple hasn't authorized its release, but, as far as I'm aware, they haven't made any attempt to suppress it either.