Neither the name of the University nor the names of its contributors may be used to endorse or promote products derived from this software without specific prior written permission. The license is preceded by the copyright statement itself, and is followed by some disclaimer information, so that if someone has problems with the software the authors can't be held liable. The Berkeley license is a rather liberal license. All it requires is that the author of the work be given due credit for their creation, and that their name not be used to promote products based on their work. It allows free distribution, as long as the terms are followed, and also allows people to modify the work and not distribute it, if they so choose.
Some contributors also omit the third clause.
Though the Berkeley license is generally used as the template for the license terms of works that are part of the NetBSD source tree, it does not apply to all works in the source tree, and you should check the individual source files to see what license applies to them. Though we would like all of the software that we distribute to be covered by a Berkeley-style license, we can't make other people change their license terms, and we don't have an infinite amount of time to rewrite all of the software that we need. This provides a striking contrast to the license terms granted by the GNU General Public License, because the GPL requires that, if you're distributing binaries, you be willing to give away the sources to build those binaries. Those of us working on the NetBSD Project are aware of this distinction, and some even value it. As stated above, we want anyone to be able to use the NetBSD operating system for whatever they want, just as long as they follow the few restrictions made by our license terms.