I agree it's confusing. Also because I often see tracks labeled as "Master" when they are just live recordings, and such. As mentioned, I think we tend to think of "Source" as being audio direct from the park masters, "Source Quality" as being audio of comparable quality to source but not actually coming from the park Masters, and "Induction Recording", "ALD Recording" and "Live Recording" being recordings made from in-park audio systems using different kids of microphone setups.
And then of course there's "High Quality" and "Remastered" audio, which is usually a mix of either source audio with live recordings or higher-quality induction recording/ALD audio with edited live recordings.
I think one of the problems is that due to the nature of how audio is circulated, it often isn't clear where the audio originates from. In the case of recordings (particularly non-live ones), it's usually from a relatively small list of people who go out and make recordings.
One of the most frustrating things about Disney audio collecting is how much of it is incorrectly or incompletely labeled and not terribly organized. You really need to know what audio is from where just by listening to it in order to have everything properly sorted. No one has, at this point, to my knowledge, created a somewhat complete, well organized collection of park audio. 1313SouthHarborBlvd did very well with their collections but of course that site no longer exists (except as a shell).
If someone were to create a somewhat complete, well organized collection of high-quality audio (particularly for WDW) I think it would remove a lot of these labeling issues (*cough* Bill...). I think a lot of the people who have sounded off on this issue already know pretty well what their audio is- with a bit of practice differentiating Live/Source/ALD/Induction is pretty easy based on the quality of the audio and what artifacts/noise are present. It's for the people who aren't that "into it" and just trying to complete their collection that the general lack of organization becomes a problem.