The winnings can consist of either real cash, points, merchandise or invitations to other important tournaments. Some freerolls are 100% free, while other may require points (that you gained by using that website), a deposit or a password. Poker rooms and websites usually run such tournaments to promote themselves, to gain new customers or to reward regular clients. But in a freeroll, the prize pool is basically a “free gift” offered by the host. In a regular tournament, the prize pool is made of all the entry fees minus the fees perceived by the house (a real or an online casino).
In case you don’t already know this, a freeroll is a tournament which doesn’t have an entry fee.
