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"Free range" refers to chickens being allowed to range freely outdoors where they can eat whatever grass, weed seeds, insects and worms they choose. This results in more nutritious eggs and meat for consumers, and more healthy, humane conditions for the birds. Some producers abuse this term and label their eggs as “free range” when in fact all they have done is open a door to allow their chickens to range in an outdoor area of bare dirt or concrete, with no pasture in sight.
Thus you need to confirm if your eggs or chicken comes from "true" or "pastured" or "grass-fed" free-range conditions. Also, some producers choose a modified system that involves keeping birds safe from predators by confining them in pens or inside electric fencing, and moving the pens frequently onto fresh pastures. Thus, pastured birds may be true free-range or penned, but either system is correctly referred to as “pastured.” And either system is a better choice than products that come from industrial factory farm conditions.
To learn a great deal more about all the terminology you might have to decipher on egg cartons these days (like "cage free" or "enhanced with omega-3s"), check out How to Decode Egg Cartons.
See also: USDA definition