"Free as in freedom - not as in free beer". Free beer is nice, but freedom is even nicer.
I have been working with companies from different sections including consumer electronics, military applications, automotive and aeronautics. One common question, regardless of section, is "Can we really use Open Source in our product?". The answer is usually Yes, you can, but....
One common misunderstanding is to interpret Open Source as in free beer. This is kind of true for some Open Source, but that is nothing you can take for granted. The "rules for how the code may be used is specified by its license.
Of those who think they had understood the difference, there is a common misunderstanding that no Open Source software is free and does not belong in any commercial products. Both misunderstandings are of course wrong, but you have to make sure that you understand the licenses you are using.
Before you start to work with any source code (not only Open Source) you always have to take the license into consideration. If do your homework you can avoid surprises and practical implications that otherwise can cause you a delayed project or legal inconveniences.
In short, you have to know what you are doing, and that should not differ from other parts of your development.
Open Source Licenses
"Open source licenses are licenses that comply with the Open Source Definition — in brief, they allow software to be freely used, modified, and shared. To be approved by the Open Source Initiative (also known as the OSI), a license must go through the Open Source Initiative's license review process."
This text is taken from the Open Source Initiative webpage , which is an organization that works with defining criterea for Open Source and certificate licenses that comply with OSD (Open Source Definition).
Open Source Definition
Many licenses  are certified and may have different requirements for its users, but they all comply with these "rules":
The license shall not restrict any party from selling or giving away the software as a component of an aggregate software distribution containing programs from several different sources. The license shall not require a royalty or other fee for such sale.
The program must include source code, and must allow distribution in source code as well as compiled form. Where some form of a product is not distributed with source code, there must be a well-publicized means of obtaining the source code for no more than a reasonable reproduction cost, preferably downloading via the Internet without charge. The source code must be the preferred form in which a programmer would modify the program. Deliberately obfuscated source code is not allowed. Intermediate forms such as the output of a preprocessor or translator are not allowed.
The license must allow modifications and derived works, and must allow them to be distributed under the same terms as the license of the original software.
No Discrimination Against Persons or Groups
The license must not discriminate against any person or group of persons.
No Discrimination Against Fields of Endeavor
The license must not restrict anyone from making use of the program in a specific field of endeavor. For example, it may not restrict the program from being used in a business, or from being used for genetic research.
Distribution of License
The rights attached to the program must apply to all to whom the program is redistributed without the need for execution of an additional license by those parties.
License Must Not Be Specific to a Product
The rights attached to the program must not depend on the program's being part of a particular software distribution. If the program is extracted from that distribution and used or distributed within the terms of the program's license, all parties to whom the program is redistributed should have the same rights as those that are granted in conjunction with the original software distribution.
License Must Not Restrict Other Software
The license must not place restrictions on other software that is distributed along with the licensed software. For example, the license must not insist that all other programs distributed on the same medium must be open-source software.
License Must Be Technology-Neutral
No provision of the license may be predicated on any individual technology or style of interface.
GPL, or General Public License, is one of the most common Open Source Licenses you will find out there. At least version 2, GPLv2, is something you will encounter for sure if you intend to build an embedded Linux system as the kernel  itself is using this license.
So what do you need to comply with GPLv2 code? Basically, you need to provide the source code for all GPLv2 licensed code. Yes, that includes all your modifications too, and this part could seem scary at the first glare.
But will you need to make any changes? Probably. If you want to run Linux on your system you will probably have to make some adaptions to the Linux kernel specific for your board, those changes will follow the GPLv2 license and should be provided as well.
The license is stated as follows:
"The source code for a work means the preferred form of the work for making modifications to it. For an executable work, complete source code means all the source code for all modules it contains, plus any associated interface definition files, plus the scripts used to control compilation and installation of the executable. "
GPLv2, Sec.3 
If any of those changes is your top-secret algorithm then you have done it wrong by design anyway. Please note that no installation information is required at all which makes it more sufficient for embedded devices.
Tivoization, TiVO ran GPLv2 only Linux kernel, but had HW signature keys that made it possible to only run signed kernels. Even if the TiVO did provide the kernel code, the TiVO customers could not build and install the firmware.
The Free Software Foundation(FSF) found this objectionable as it violates one of the purposes the GPLv2 license had. So FSF ended up with GPLv3 to solve this.
(Yes, this logo is under Public Domain  )
One big difference between v2 and v3 is this part
" “Installation Information” for a User Product means any methods, procedures, authorization keys, or other information required to install and execute modified versions of a covered work in that User Product from a modified version of its Corresponding Source. The information must suffice to ensure that the continued functioning of the modified object code is in no case prevented or interfered with solely because modification has been made. "
GPLv3, Sec .6 
Which states that "Installation information" must be provided together with the source code, in short, you have to provide instruction for an end-user to build and replace GPLv3 parts of your product. But there are also a few exceptions. Most of them is more or less hard to make any use of in a real world product.
It only requred for "User Products". It is hard to say if this is an exception or not as most of the products that use GPLv3 is user products. But the license states that it only affects User products. Consult your lawyer as it is not entirely clear what a "User product" really are.
Only if device is sold or offered for long-term lease. As with all lega stuff, things are a bit unclear. Does remote access or temporary possessions qualify for example?
Please note that even long term lease need you to provide installation information.
If non-modifiable by anyone, you don't have to give the information how to reinstalling or modify binaries.
If you want to be able to update your software, then you will probably need to provide the "installation information".
You can void any warranties if binaries are modified, but you can't prevent reinstallation of modigied binaries.
There is a reason why an author of code chose to use any particular license, and it is important (both for principal and legal reasons) to respect that. Some licenses are more or less appropriate for specific products, but the general rule I follow is to avoid any GPLv3 (both GPLv3 and LGPLv3) licensed software in any embedded system as it hard to be fully compliant. The installation information is often something that companies want to keep for themself, with all rights.
What is my opinion about this? Well, I do like to have the freedom to install whatever software I want in the products I own, but there are circumstances where I'm not sure if it is a good idea when it comes to safety and liability. If I buy a car in second hand, I don't want the software for my airbag or braking system to be "fixed" by some random guy. I think that the Open Source has limited use in too restrictive licenses, and that is somehow counterproductive for the Open Source itself.