In the beginning of this story there was MeeGo, developed by Nokia and Intel, great software contributed to open source community. When Intel switched their focus on Tizen (Samsung) and Nokia's mobile department was acquired by Microsoft, MeeGo was no longer in their interest. MeeGo developers (working at Nokia) were put out of business, but they didn't give up on it. Another company Jolla, boosted into start via Nokia's bridge program and the government of Finland, was founded and strongly supported by Nokia's N900/N9 customer/developer community.
Jolla picked Linux kernel, Mer core ("MeeGo Reconstructed"), rpm-package management, systemd, libhybris, Linux root access, terminal in the phone etc. and developed their proprietary UI and apps on top, additionally adding 3rd party services like Aliendalvik (Myriad) to support Android apps, MS Exchange Active Sync (Microsoft) for business email, and HERE Maps (Nokia) w/o navigation features. Two of Jolla's essential apps, browser and office have later been switched to OSS license, even more is promised but seems to be taking time. Some community members blame the investors willing to hold "owning" of the software, some blame Jolla themself, but the promises are still alive.
Jolla had what I'd like to call a "close to death" experience in the end of 2015, when their Tablet campaign failed and financing round was also delayed. In the rumors I've heard they couldn't even pay to their employees for a while. The company's loans and activities were rearranged via the court in Finland, resulting Jolla to drop from the hardware business, reducing their size dramatically and focusing on software development especially for BRICS countries. They survived. Currently, they've been financed by 70M USD and they are looking forward for 250M USD financing (in my understanding maybe secured) for Sailfish China development. They are also hiring again.
While having closed sourced components (about 20%) included in their software, Jolla never reached a large interest among the Linux community by date. The OS does not provide a functional system as OSS, but projects like Nemomobile are using the core to reach that, replacing Sailfish UI for example with Glacier UI.
Source: Sailfish Website