Modifications can be licensed differently but that takes extra work. If I release a project with the MIT license at the top of each file and you download my project and make a 1-line change which you then redistribute, you need to explicitly mark that line as having a different license from the rest of the file otherwise it could be interpreted as also being MIT licensed.

You also could not legally remove the MIT license from those files and distribute with all rights reserved. My original granting of permission to modify and redistribute continues downstream.

This isn't that uncommon:

* If a country doesn't have "closed borders" then many foreigners can visit if they follow certain rules around visas, purpose, and length of stay. If instead anyone can enter and live there with minimal restrictions we say it has "open borders".

* If a journal isn't "closed access" it is free to read. If you additionally have permissions to redistribute, reuse, etc then it's "open access".

* If an organization doesn't practice "closed meetings" then outsiders can attend meetings to observe. If it additionally provides advance notice, allows public attendance without permission, and records or publishes minutes, then it has “open meetings.”

* A club that doesn't have "closed membership" is open to admitting members. Anyone can join provided they meet relevant criteria (if any) then it's "open membership".

EDIT: expanded this into a post: https://www.jefftk.com/p/open-source-is-a-normal-term