"[Ariana was in a] bad past relationship, and now she is with someone who appreciates her and makes her laugh and just makes her feel good," the source said.
Meanwhile, the source described Davidson as a great guy, but said that he often lets his emotions get ahead of him.
"In relationships, he is known to be the caring one and the full steam ahead guy. He is not shy about who he likes and, like with Ariana, is very public," says the source.
Furthermore, the source tells ET that they believe the consensus among Davidson's friends is that their relationship is fueled very strongly by their passion and their emotions.
"The combination of a girl who is yearning to be loved and mixing it with a guy like Pete creates this intense relationship that is moving a million miles a minute," the source said. "For both of them, this relationship is heaven compared to their past relationships and they're just clinging to that heaven and thrilled about it."
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Ariana Grande Opens Up About 'Toxic' Relationship With Mac Miller
While the source says Davidson has not yet confirmed the engagement to all of his friends, but they "really want to see Pete happy because he is a genuinely great guy."
News of Grade and Davidson's engagement broke on Monday. The 24-year-old stars were first linked late last month, following their respective break-ups -- Grande from Miller and Davidson from Cazzie David, daughter of Curb Your Enthusiasm's Larry David.
Grade and Davidson were first were rumored to be an item after being spotted together by a source at an SNL after-party. The two then made their relationship Instagram official on May 30 with a sweet photo of the two clad in Harry Potter garb.