As with any other business, web hosting is no different than any other. There is always going to be competition. Some companies will offer free hosting & FTP as a marketing ploy to draw new clients in. This is a great way to showcase the options and functionality of the hosting service itself. There are definitely benefits and drawbacks to offering and even using a free service but you really can't beat the price.
Usually a new or expanding web hosting service will offer their clients the option of using a free hosting & FTP account, allowing new clients to experience the services and benefits of using their hosting site. Web hosting is the backbone of the internet. Hosting services provide and maintain the hardware and software that makes the internet possible but they also help the client with the building and maintenance of a web site.
The good news is that the free hosting FTP is free. Many times a free service will offer most of the bells and whistles that are needed to build a professional and mostly functional web site. This will generally include software that allows the client to build their own site by using the host's software. Many times they will offer templates that help the new comers and novices in this manner. E-mail is also included along with other services like credit card acceptance support for those who plan on selling online.
The bad news is that these services do have limitations in the actual functionality of the site and its annex applications. Generally, limitations are placed on how much storage space a site can have and also how much bandwidth a site can use. Sometimes these can be major pitfalls to a site that experiences a high volume of visitors.
File Transfer Protocol or FTP's are generally included in a free hosting FTP site, allowing the client to store data to a remote site, thus eliminating the need to purchase additional storage space. FTP is used for the transfer of data as is applies to uploading and downloading of information.
Typically the data is transferred using the same protocols for data transfer method that is employed on the internet. This protocol is call TCP/IP (Transmission Control Protocol and Internet Protocol) which is the gold standard data transfer method used worldwide. Try to think of it as how you send and receive emails.
While the FTP is generally not an encrypted system there are a couple of variations that can be used for securing your data. The first method uses a password authentication method, once again, much like using email. The other more secure method is called FTSP or FTP with Secured Socket Layer (SSL) that do use a form of encryption. The latter is quickly becoming the preferred method of data transfer.
However, when using a free hosting FTP account, a method known as anonymous FTP may be used as it requires no addition software and doesn't affect the host's bottom line. For the most part though, you will definitely get your monies worth by getting a site that offers free hosting & FTP.