How is the luminosity of a quasar generated?
The extraordinarily bright luminosity is generated by the ultraluminous nuclei, of a far distant galaxy.
The fibrous quasar-fuzz reveals that the extraordinarily luminous star-like quasar is in a far distant galaxy. The point source of light called quasar is surmised as nuclei of the galaxy, appearing as a fuzz surrounding the quasar.
Luminosity of a quasar might be as large as 100000 times the luminosity of our galaxy Milky Way (MW). For a contrast: Sun;s luminosity L = 1 is about 1/(250 million) of MW luminosity.
What is observed as a quasar now is a revelation of what i was about billion(s) years ago.