Your understanding is correct. Open source means nothing more than you can view the source. It's just typically open source software also comes with a license that allows you to use it free, either with MIT or similar.
You are thinking of Source-Available Software[1], not Open Source. The sets of Open Source and Free Software licenses are (almost) identical. OSS == FOSS == FLOSS == FS, etc.
Your understanding is not correct. Open source does not only mean than you can view the source. If you're not familiar with the term, look it up. Don't make things up.
OSS !== FOSS