Free Space Loss is the amount the power (dB) a radio signal dissipates in “free space”. Here on Earth, we have atmosphere, buildings, terrain and many other things. Unfortunately, there isn’t any free space to speak of.
Free Space Loss is commonly used as a baseline to determine the minimum level of power required to make a connection and a component in calculating “link budget”.
Reflections of the signal from the ground and other objects, noise, atmospheric conditions, and many other factors contribute to the actual signal losses. These losses are generally calculated separately and the formulas and factors considered vary depending on the circumstances.