Another attractive feature is that it's based on an open-source development platform, Hirsch says, meaning it's available to the general public with relaxed intellectual property restrictions. This allows users to create additional features through incremental development or collaboration. Hirsch has taken advantage of this ability by embedding Web 2.0 features such as blogs and wikis within the software's environment. (emphasis added)
The first "it's" refers to TEAMS. The second "it's" apparently refers to the "open-source development platform," which apparently is J2EE. On the first reading, it is pretty easy to get the impression that TEAMS is what is open source, but that's not the case. Users can "create additional features" to J2EE "through incremental development or collaboration," users cannot "create additional features" to TEAMS "through incremental development or collaboration."
Presumably one can write J2EE applications (and maybe by other methods) that access TEAMS's database and integrate with it in various ways, which is nice. I don't know exactly what they mean by embedding features "within the software's environment," but I don't think it means, "you can view and modify TEAMS's source."
Having your school's data in a database which you can access as you see fit is clearly a good thing, but the mystery is why anybody would have ever accepted not being able to do this.
I wish eSchool News would be more clear about what is and is not open source software.