Free range is a method of farming husbandry where the animals are permitted to roam freely instead of being contained in any manner. The principle is to allow the animals as much freedom as possible, to live out their instinctual behaviours in a reasonably natural way, regardless of whether or not they are eventually killed for meat. In practice, there are few regulations imposed on what can be called "free range," and the term may be used misleadingly to imply that the animal product has been produced more humanely than it actually has been.
Free range may apply to meat, eggs or dairy farming. http://en.wikipedia.org/wiki/Free_range