"Free-range" is a bit of a nutty term, at least in its technical meaning as regulated by the USDA, which simply calls for the laying hens to be "allowed access to the outside."
As you might imagine, that phrase can be interpreted generously or narrowly.
Best Case Scenario
Let's start with the positive. On the generous front, there are farmers who let their free-range chickens roam on real fields and pastures, giving them free and easy access to extensive outdoor areas, complete with the chance to play and food to forage. Chickens are brought inside at night in clean, well-tended coops where they have spaces to roost and nests in which to lay their "free-range eggs."
These farmers are raising chickens the way most of us consumers think chickens should be raised, and in a way that matches notions that pop to mind when the phrase "free-range" is thrown around.
Worst Case Scenario
Larger producers, however, have been known to follow only the letter of the law, not its spirit, and put an open window or small door that leads to a paved patch of ground at one end of a large, crowded hen house. They are, rightly or wrongly, legally allowed to label their eggs "free-range."
As with most things, there are also plenty of "free-range eggs" that come from chickens who were raised somewhere between full-field frolics and warehouses with tiny doors.
If nothing else, though, free-range eggs at least come from hens that were raised cage-free.
If it's important to you that the eggs you buy are from chickens who truly have the freedom to move around outside, you might want to look for pastured eggs. "Pastured" doesn't have a legal meaning and isn't third-party verified, but farmers who use the label often sell at farmer's markets or co-ops, and can usually answer questions about how their chickens are raised and why. Some even offer farm visits so you can see for yourself!
Why Egg Labels Matter
Whether you're interested in animal welfare or food quality, how chickens that lay eggs are raised matters. Better living conditions for the birds can be argument enough, but that better standard of living for the chickens also produces better quality eggs. Chickens allowed to hunt-and-peck a bit for their food have a more varied diet, and fresh greens help turn their yolks brilliant deep yellow or even orange, with a corresponding intensified flavor and increased richness.