A free atom is one which experiences no forces from neighbouring atoms.
The Bohr model (named after Danish physicist Niels Bohr) of an atom has a small, positively charged central nucleus and electrons orbiting in at specific fixed distances from the nucleus.
Electrons are not allowed to orbit in the space between these specific fixed orbits. Each of these orbits has an energy level associated with it.
The diagram shows the allowed orbits and energy levels for a hydrogen atom.