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What do you mean by "source-based distribution"?

One without packages shipped as prebuilt binaries: Gentoo [1] would be a good example. You compile every binary yourself (sometime you can use prebuilt binaries for the biggest software, if you are so inclined and the distro allows it).

[1] https://www.gentoo.org/

Doesn't arch use AUR / pacman for binaries / package management? I wasn't aware that like Gentoo you had to compile most software

No, he's wrong. Arch Linux is primarily a binary distribution.

My Arch install doesn't compile anything locally unless I'm installing from AUR.

Maybe it's doing it behind the scenes or something, but I'm doubtful, because otherwise I think my upgrades would take a lot longer.

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