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A Free Account is an account on Tibia for which you do not have to pay any money to play the game. As with most MMORPG games having a free account does not allow players to do everything on Tibia, for this you will need to upgrade your account to a premium account.
Free Account users are limited to which monsters can be fought, VIP list amount, depot storage, spells available and freedom to travel amongst other limitations. Certain items can only be purchased from NPC's in premium cities. However, Free Account users may purchase these from premium players at a higher price.
When a premium account user's subscription expires, their account is downgraded back to a free account (premium account benefits such as promotions are put on hold for the duration of the time they remain a free account). Note, however, that some of your premium questing efforts are still beneficial to you while free account. If you have been premium at least once and finished The Travelling Trader Quest and The Thieves Guild Quest during that time, you will still be able to trade with Rashid and Black Bert as a free account player. You will also keep access to the Royal Mailboxes you might have unlocked during The Postman Missions Quest.