Open it and read the README file.
It should be .tar.gz most probably.
tar is an arcihiving format and gz stands for gunzip which is for compressing files.
Besides the software you install will have many dependancies. So, you will have to search for those and install it.
It's a lot of headache. Installing from source is only recommended if you have lot of time and a bit of knowledge about linux. But, you can as well go ahead and give it a go. I have tried compiling a few softwares from source in Slackware it took long time to find all dependancies and get everything working but it makes you understand a lot of things too, no doubt.