So-called free user have all rights' boxes unchecked, including the right for "Free Use" section.
A paid user (full user, normal user) is someone who has access to the system, a user who has credentials to view, create, or update something. It's someone who can log in, in normal mode or internet-kiosk mode.
A free user (team member) is essentially not a user of the system, but just a named person in the system, for whom you can keep records of. A free user does not have access. This is beneficial for example when someone leaves your company, then you can convert the paid user to a free user instead of deleting him/her, to keep records of that person's actions.