Free bets, which often come as part of Welcome Bonus, are like bonus points that can be redeemed on various bet products depending upon the terms of the bookmaker. Each betting site has its own conditions for Free bets which can be used as bonus or extra balance, to be used for further betting in some bet market. These are often found in bet slip, thus when you adding stakes you get an option asking if you wish to use your Free Bets or bonus.
Often bet products that are open to Free bets are restricted to other promotions. You must check Free bet or promotions related T&Cs of your betting site before you place your stake.