A text config file is software because it's code that runs on your computer,
but like a PNG file, they can be freely read and modified as-is. Binary code,
on the other hand, is impossible for a human being to interpret and modify
and therefore source code is necessary. That's the entire point of requiring
source code to be distributed along with binaries, because the freedom to
modify could not exist otherwise.
Nevertheless, the fact that a PAK file format is being used specificall to
protect the author's assets is definitely problematic. Fully free software
allows the user to modify and share any and all parts of the software for any
reason, and the only intermittent issue should be whether or not it is
copyleft.
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