What is __init__.py for?

What is __init__.py for in a Python source directory?

It used to be a required part of a package (old, pre-3.3 "regular package", not newer 3.3+ "namespace package").

Here's the documentation.

Python defines two types of packages, regular packages and namespace packages. Regular packages are traditional packages as they existed in Python 3.2 and earlier. A regular package is typically implemented as a directory containing an __init__.py file. When a regular package is imported, this __init__.py file is implicitly executed, and the objects it defines are bound to names in the package’s namespace. The __init__.py file can contain the same Python code that any other module can contain, and Python will add some additional attributes to the module when it is imported.

But just click the link, it contains an example, more information, and an explanation of namespace packages, the kind of packages without __init__.py.