A free listing means you're not charged an insertion fee. You won't pay any fees if the item doesn't sell. (If a listing is not free, then insertion fees range from - I think - 50 cents to $3.00, depending on start price and regardless of whether the item sells).

If the item does sell, eBay will then charge the 7.9% final value fee, which is calculated on the sale price(s), added to your account and then charged once per month.

If a buyer uses PayPal, the fee for that is taken immediately before your account is credited with any funds.