It seems to be 'Animating Life Force'. You can find it gathering in places as a liquid, and using this kind of Source empowers your spells and abilities (Aleroth used it for healing). When Source is inside a person it is effectively their Soul, since you can do terrible things like rip the Source out of someone and make them stop existing / no longer able to go to the Hall of Echoes. Or enslave people by taking their Source.
But you can also add more Source to an already living thing, which gives you immortal wizards. Or keep Source inside a corpse (or soul jar) so that they continue to be animated even after death as Undead. Or pump them so full of Source they become a weapon.
A really good visual explanation and pretty much spot on.
