Whats the deal with 'Freeware'?

Can anyone explain exactly how 'Freeware' works on the Internet?
There is some pretty cool stuff out there which must have cost someone time, effort, and expertise...and so I am wondering why or how come its produced for free?

Also, what are your recommendations for the best art painting/drawing software that is available for free or little money...

Thanks in advance for any good links or recommendations