There is a source code: design files that they release in a format supported by a nonfree program. Many projects used these to make their own boards. http://arduino.cc/en/Main/FAQ has more details.
Hardware development usually uses nonfree software and nonfree components. Practically no FPGA development can be done without nonfree software and nearly no chips have design sources available. Open source hardware has some advantages, while it's not sufficient for freedom-respecting hardware, as "open source" ARM boards with software blobs show. I don't use "free" as "gratis", so I use the term "free hardware".
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