Proprietary file formats (such as the Microsoft Word format, Abobe PDF, Macromedia Flash, etc.) are owned by a company or organisation. The company is at liberties to make changes to the format or to change the licence conditions governing use of the format (including software to create files and software to view files). Use of proprietary formats leaves the user hostage to fortune: for example the owner of a popular and widely-used format may increase the costs of its software (or introduce charges for viewing software).
Open formats are not owned by a company or organisation - instead they are owned by a national or international body which is independent of individual companies.
Many standards bodies exist. Within the Web community important standards organisations include the World Wide Web Consortium (W3C), the Internet Engineering Task Force (IETF), ECMA (European Computer Manufactures Association), ISO, etc. These standards organisations have different cultures and working practices and coverage. W3C, for example, is a consortium of member organisations (who pay $5,000 to $50,000 per year to be members). W3C seeks to develop consensus amongst its members on the development of core Web standards. The IETF, in contrast with the W3C, is open to individuals. ISO probably has the most bureaucratic structure, but can develop robust standards. The bodies have different approaches to defining standards: ISO, for example, solicits comments from member organisations (national standards bodies) whereas W3C solicits comments from member organisations and from the general public.
You should not confuse "open standards" with "open source". Open source software means that the source code of the software is available for you to modify and the software is available for free. This is in contrast to licensed (or proprietary) software in which the source of the software is not normally available. Both open source and proprietary software can be used to create and view open standard formats.