The Linux kernel, started by Linus Torvalds, was released as freely modifiable source code in 1991. The first licence was a proprietary software licence. However, with version 0.12 in February 1992, he relicensed the project under the GNU General Public License. Much like Unix, Torvalds' kernel attracted the attention of volunteer programmers. FreeBSD and NetBSD (both derived from 386BSD) were released as free software when the USL v. BSDi lawsuit was settled out of court in 1993. OpenBSD forked from NetBSD in 1995. Also in 1995, The Apache HTTP Server, commonly referred to as Apache, was released under the Apache License 1.0.
Most free software licenses are based on copyright, and there are limits on what kinds of requirements can be imposed through copyright. If a copyright-based license respects freedom in the ways described above, it is unlikely to have some other sort of problem that we never anticipated (though this does happen occasionally). However, some free software licenses are based on contracts, and contracts can impose a much larger range of possible restrictions. That means there are many possible ways such a license could be unacceptably restrictive and nonfree.
Often used in good faith by people who refer to what Free Software stands for, the term "Open Source" - originally defined to mean the same thing as Free Software in terms of licenses and implementation - has seen inflationary usage. Nowadays, it is regularly used for everything between Free Software and the highly proprietary "Governmental Security Program" (GSP) by Microsoft2.