WHAT IS SOURCE ORG?
Source org is any type of organization where you have your managed package installed and where all managed subscriber editable components like Page Layouts, List Views, Filed Sets, etc. are properly configured. Consider Source org as a source of changes that you want to deliver to your subscribers' organizations. It's a good practice to use TSO organization or a demo as a Source org and not to use Packaging.
What about unmanaged packages?
Zuppio doesn't support them as unmanaged packages are not upgradable.
Why not a Packaging org?
The only reason is that Packaging org doesn't have your managed package installed.
