To me at least, it means a market in which the basic rules of commerce are enforced but beyond that the government doesn't micromanage. For example, contracts are enforced, there's some basic truth in advertising laws, there's a trustworthy currency available, and all the other basics of civilization like "your competitor isn't allowed to murder you".
It's obviously a fuzzy scale.
In a free market like that it's not guaranteed that everything ends in monopoly. Actually mostly it won't. Monopolies that do occur are due to high costs of entry and are usually temporary.
