An HOA (home owners associations) can say what color you can paint your house, What you can plant in your yard, What you can have in your driveway, and some even say what color your blinds can be.
Microsoft controls your computer, they say what info is sent back to Microsoft, and they say when you must upgrade. They can shut down your computer when they want whether you like it or not.
Yes, they’re taking the source code from upstream, modifying (“patching”) it, compiling it, then uploading their compiled binaries to the Ubuntu repo where your system downloads them during an update.
You can technically download the source code as well, if you activate the source repo. But hardly any end user does. And the source code you get doesn’t compile to the same binary you get from the repo anyway. (This would be called a “reproducible build”. Some distros try to be reproducible. Ubuntu doesn’t, they have other priorities.)
Thank you. That makes sense why some downstream distros designed for specific purposes (e.g. gaming) might include a handful of their own repos for specific software.