Truly free software is always free. Software that is placed in the public domain can be snapped up and put into non-free programs. Any improvements then made are lost to society. To stay free, software must be copyrighted and licensed. To the uninitiated, either a piece of software is free or it isn't.
Real life is much more complicated than that.
To understand what kinds of things people are implying when they call software free we must take a little detour into the world of software licenses. Copyrights are a method of protecting the rights of the creator of certain types of works. In most countries, software you write is automatically copyrighted. It is up to the author to include a license which declares in what ways the software may be used. Of course, different circumstances call for different licenses.