Speed Dreams is an open-source racing game that comes with 3D graphics and plenty of other cool options and features. This neat racing simulator features an accurate physics engine which makes the racing as realistic as possible. Though initially inspired from Torcs, another open-source racing sim, Speed Dreams managed to become more attractive, as it sports numerous improvements and additional advantages. For example, the AI opponents can be tougher, the car sets are better balanced and include cool new models, the tracks are more diverse, and so on.
As for the visuals, though they're 3D and they were being constantly improved, they're still far from the standards offered by commercial power games. They're not so poor, but they lack the sophistication that nowadays' games usually provide.
Anyway, the important part about Speed Dreams is that it's open-source, and therefore suitable not just for entertainment, but also for research, testing, study, and so on. The game is also highly-customizable and comes with a lot of advanced settings.
Since it seems to pose a lot of importance to some people, I will dedicate this paragraph to mentioning that the default controls are set by default to allow steering using the mouse and accelerating or breaking using the keys - which are a rather unintuitive combination and many players will instantly change. It's a small fact and a rather insignificant disadvantage, I know, but it might matter to some. Furthermore, Speed Dreams doesn't include a multiplayer mode, but that was rather expected from a game that claims from the very start that it focuses on offering other types of benefits to the players than a captivating multiplayer experience.
To sum it all up, if you are looking for an open-source racing simulation, you should definitely give Speed Dreams a try. It's packed with numerous cool features and it's backed by an active development community.