You're oversimplifying things. Some free software is gratis (free of charge), some is libre (free to modify), some is both, some allows commercial distribution, some doesn't, and the list goes on. Since people own the copyright, people are allowed to write their own software licenses, no matter how weird they might be. Some projects need to be commercially viable in order to be accepted as standards (X.Org and the X11 license), while others would rather be shielded from commercial abuse (GNU and friends). Diversity in software licenses, even if it might be a bit confusing, is a lot better than the alternative.