A freeroll tournament is a tournament with no entry fee, although some freerolls require a payment at some point to gain entry to the tournament.
In a typical pay-to-play tournament, the prize pool consists of an accumulation of the entry fees minus a "fee" which is retained by the house. In a freeroll (at least from the players' perspective) the prize pool is essentially a "donation" provided by the house. Of course, in most freerolls the house is able defray a significant portion of the prize pool (or even turn a profit) by charging for food and beverages, sponsorship fees, admission to spectators, broadcast rights fees, or any combination of these. Sometimes a particular cardroom or casino (either traditional or online) will offer a freeroll tournament to frequent players. Invitation-only tournaments are frequently freerolls.
Freerolls at Internet poker sites should not be confused with their close counterpart -- play money tournaments. Freerolls are different from play-money tournaments in two respects. Play money tournaments usually require the 'payment' of play money and the tournament winnings are play money. Freeroll tournaments can be genuinely free, may require a payment of points (from a point system developed by the site), or on some occasions require a deposit of funds into the player's account. The winnings are either real money, points, merchandise or entry tickets (invitations) to other tournaments.
Most if not all Internet poker sites have freeroll tournaments although in many cases require a payment of points to play. These points typically can only be earned by paying and playing real money hands which in essence is a payment required to play their 'freerolls' and therefore a loose use of the term 'freeroll'. There are Internet sites that allow playing in freerolls without payment of any kind and with the chance to win real money.
It is not unusual to pay to play in a feeder tournament that gives the winner(s) a free entry to another tournament but it is debatable whether these second level tournaments can be called 'freerolls', since they require a buy-in, albeit smaller than the major tournament one. More often, such tournaments are called 'satellites'. This format is typical of freeroll tournaments both on the Internet and in the 'brick and mortar' sites.
The Professional Poker Tour is one such 'freeroll', with entrants being required to qualify through their results in previous tournaments. Sponsorship and broadcast-rights fees fund the prize pools.
Freeroll tournaments are not exclusive to poker. Casinos frequently offer them to frequent and/or high-value players in games such as craps,blackjack, video poker and slot machines.