Discrete Source Controls refer to a system architecture that allows a display to be independently adjusted for more than one signal type or video source, and to have the resulting settings for each signal or source type stored separately and then applied correctly to the active video source or signal type.
It's highly desirable for a display to have the ability to be calibrated separately for different signal types, as different signal types can have significantly different output characteristics. For example, the signal produced by a 480i component video output is markedly different from the signal produced by a 1080p HDMI source.
As a result, a display with just one set of controls and memory bank for grayscale adjustment will generally not perform as well as a display that provides discrete settings and memories for different signal types. In the case of a display with only global controls for grayscale (to consider just one area of adjustment), a compromise will have to be made -- either "splitting the difference" between the way the display reacts to two different signal types, or favoring one source/signal type over another in order to ensure that the display is optimized for at least the most-viewed or most-critical source.
How many sets of controls and memories are actually needed? There's no one-size-fits-all answer to that question, and this will ultimately be determined by the number of different sources and signal types to be used with a particular display. The best-case scenario would be a display with discrete controls/memories for each physical input present on the display. In fact, that configuration is becoming more common with certain classes of display products, such as digital front projectors.
But as a general guideline, it is highly desirable that a display provide at least three discrete sets of controls, as this would allow the display to be calibrated for two different HD signal types (say, 1080i component and 1080p HDMI) and one legacy standard-definition signal type (either 480p or 480i component for a standard-definition DVD player).
Even in the increasingly common scenario where a display is being fed multiple signals of the same type, it's extremely helpful to have discrete controls, as certain types of components may deviate from industry standards. This, in fact, is a common challenge posed by standard-definition DVD players.
If the display you own or plan to purchase falls short of providing the recommended flexibility for multiple signal types, there is a solution, albeit one involving additional cost and some additional complexity -- an external video scaler/processor.
With an external scaler/processor, a display can be presented with just a single signal type -- and one that ideally matches the native resolution of the display (see 1:1 Pixel Mapping). However, variations will still be present among the different signal types sent to the scaler/processor, and for this reason it is recommended that any scaler/processor used to address this issue have discrete controls and memories for each input.