SIM free means you only receive the handset, and no network or fixed contract is attached to the phone. This means you are able to decide which network you would like to use, based on your own personal preferences, or the best coverage in your area.
To receive and make calls and texts and use data you'll then need a SIM card. You can get one as part of a SIM-only contract which are available on shorter commitments, usually ranging from 1 month to 12 months or a Pay As You Go SIM.