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Here some people have made distributions based on Ubuntu and they're charging a price for it. Is this legal?

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Yes, it is ok to sell them. However, a seller must provide full source code for the components covered under a license of that type. Link. Proprietary software, if it qualifies, doesn't have to provide full source code but most of the components that they would be selling would be free and open source software so they would have to provide source on demand. And with the source you can compile it yourself.

Also, Red Hat sells RHEL and provides "source code" that has had all their patches merged into it without providing details of what specific patches were merged. That is within the letter of the GNU license but is not in the spirit. They also only provide source to their distribution, no binaries so if you want RHEL without paying for a license you either compile it all yourself or use a clone like CentOS.

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