From Nordic Larp Wiki
Freeform role-playing describes any one of a number of unrelated role-playing traditions that have originated by rejecting some of the main components of traditional tabletop role-playing - usually game mechanics (in the traditional sense of points and dice), and possibly also the narrator/GM.
In Nordic larp, the term is usually taken to mean the freeform traditions of Sweden and Denmark, centred on the Fastaval convention. Such freeforms are often larp-like in the sense that players may move and gesticulate in-character, but are played with only 3-8 players who remain in the same room. Freeforms tend to be strongly narrative, with a GM taking the players from scene to scene. They are usually based on a repeatble, written, scenario.
Plenty of angry debates have been held on the topic of whether freeforms are larps or not. The stereotypical freeform can be distinguished from the stereotypical larp by the presence of an active narrator in the former and the latter having costumed players spread over a larger area with scenography adapted to the fiction. However, due to experimentation in both larp and freeform communities, these borders are often blurry.