He means free as in freedom, so it has to respect the freedom of the end-user to inspect the code, modify the code to their needs and to redistribute their modified version as well as the unmodified version.

Basically open-source, but with the strong philosophical difference that the goal is for the users to have their freedom, not for a company to apply the same software development strategies that made Linux and Firefox so successful. (Also, someone will now murder me in my sleep, because I've said that it's basically open-source.)