The source hot is spliced to the red wire which is connected to the bottom terminals on the switch at the other end. The black wire is connected to the top terminal on the switch which runs power back to the fan where it is spliced to both the black and blue fan wires.
This wiring arrangement allows for lowering the lights with a dimmer and controlling the fan with the builtin pull chain. The source is at the ceiling outlet box and 3-wire cable runs from there to the switch box. The neutral from the source is spliced directly to the white wire on the fan kit and the cable, running it through to the switch box.
This is the updated wiring for this arrangement, with a 2-wire cable added between the fan/light and switches. The white wire is no longer used for hot and the source neutral is run through to the switch box to satisfy the 2011 NEC requirement of a neutral wire in all switch boxes. All other wiring is the same as above.
This diagram illustrates the wiring for a circuit with gfci receptacles followed by an unprotected light and switch. The light switch is connected directly to the source and the load terminals on the gfci are not used.