A free bet is for example if you get €25 to bet with at a bookmaker. If you place the full amount on a match with odds 1.5, you will win €37.50. But the bookmaker will only pay out your winnings (€12.50). This is a SNR (stake not returned) free bet. It’s also commonly called a “matched bet”, where the bookmaker doubles your bet amount up to a specific limit.
Since you will only get to keep the winnings in a free bet, you want to bet on a high odds that maximizes your potential profits. To guarantee a profit, you cover the other side using matched betting or arbitrage betting.
There are also SR (stake returned) free bets, but they are rare. Free bets are usually (but not always) only given to new customers. Also, please make sure to check the bookmakers free bet rules, as they might differ from one another.