In a freeroll (at least from the players' perspective) the prize pool is essentially a "donation" provided by the house.
Sometimes a particular cardroom or casino (either traditional or online) will offer a freeroll tournament to frequent players.
Freerolls at Internet poker sites should not be confused with their close counterpart -- play money tournaments.
Most if not all Internet poker sites have freeroll tournaments although in many cases require a payment of points to play.
There are Internet sites that allow playing in freerolls without payment of any kind and with the chance to win real money.
Many believe the term comes from early 1950s Las Vegas, when guests would often be given a "free roll" of nickels to play at the slot machines upon check-in.