Paul, to answer your question, the large majority of Linux distros are open source, with a few exceptions such as RedHat & Ubuntu also offers a version with Full Pro support, these are subscription based.
Most anyone with the experience can take a distro like the source code of Ubuntu (with branding taken away), play around & create their own. It's how Mint, Zorin, Peach, some Puppy versions & others does. How they do it, I have no idea, because obviously am no developer. However, most copies off of Ubuntu's base, because it's easy to learn, and may also offer the best shot at success for the one releasing the OS.
Developers will either self finance their projects or be backed by a group, many putting in long hours after working their regular job to keep the bills paid at home. Much sacrifice has to be made, all of this initial work is pro-bono. Some are lucky and has friends to assist with coding, artwork and further OS development. Today, the deck would be greatly stacked against one who wanted to create a Linux distro w/out any assistance.
Once the OS has been compiled, it'll then have to be released as an alpha, beta, release candidate (final stage before release) & then released to the public to use. Of course, there are ins & outs to this process, but I don't know them all, one is that it's checked to be sure no unauthorized software is thrown in w/out consent (such as Adobe software), though am unsure as to whom does the checking. It would have to be one w/out ties to a distro, to prevent stealing one's ideas & distributing (or including) as their own work.
My suspicions are that the Free Software Foundation (headed by co-Linux founder Richard Stallman) would be in on this inspection, as these has to receive his personal stamp of approval anyway. Those who creates Linux distros, in addition to those who releases subsequent versions, regardless of popularity, has to meet the FSF guidelines, this isn't a "free for all" deal here, meaning there's regulation in place to protect Linux distros from having their logos & some other custom features copied. Those who distributes Xfce & KDE versions has additional requirements to meet, as well as those wanting to re-distribute MATE or Cinnamon (Linux MInt exclusives).
Speaking of which, did you know that the Firefox browser is also a open source project? As well as the Chromium browser (the base of the proprietary Google Chrome), it's the same. Opera is no longer open source, there has been ownership changes inside of the last 2 years, why the Linux version hasn't been upgraded in some time.
One of the best things of all about open source software, is that if one finds a legit bug & offers a fix, after swift but careful approval, will be offered to users inside of 24 hours. Whereas with Windows, if it's three weeks away from Patch Tuesday, tough turkey, it's not going to be fixed before next Patch Tuesday rolls around. That's a shame, because these paying customers may be waking around with a moderate to serious breach for up to 34 days (if there's 5 Tuesdays in that cycle), before a fix is issued, which will be way too late for many. Only the most severe of emergencies gets an out of band fix, and MS refused to bend on that policy.
Well, that's the best I can explain, hope that it's helpful.
Don't forget, when you need assistance, always feel free to create a new Topic, or reopen your old if it's the same issue again. There are no "dumb" questions here.