All the free software available on the ACME Labs web site has a copyright notice like this one:
Copyright © 2000 by Jef Poskanzer <email@example.com>. All rights reserved. Redistribution and use in source and binary forms, with or without modification, are permitted provided that the following conditions are met: 1. Redistributions of source code must retain the above copyright notice, this list of conditions and the following disclaimer. 2. Redistributions in binary form must reproduce the above copyright notice, this list of conditions and the following disclaimer in the documentation and/or other materials provided with the distribution. THIS SOFTWARE IS PROVIDED BY THE AUTHOR AND CONTRIBUTORS ``AS IS'' AND ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED. IN NO EVENT SHALL THE AUTHOR OR CONTRIBUTORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE, DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT OF THE USE OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
So what does this legalese mean? This is a modified version of the BSD license. You may be more familiar with the Gnu Public License, since it gets a lot of press. Well, forget about that. The BSD license is very different. While the Gnu license puts all sorts of restrictions on what you can do with the software, BSD-style licenses say "Hey, do what you like, we don't care. Just let people know we wrote it, and don't sue us." That's really all there is to it. The first paragraph with the numbered items says you can do what you like with the code, as long as you keep our name on it. The original BSD license had a couple more provisions there, we got rid of those. The second paragraph, all in capital letters, is a standard legal boilerplate notification that tries to make it difficult for anyone to successfully sue us over the software.
By the way, FreshMeat has a nice list of different types of freeware licenses. There are quite a few besides BSD and GPL. There's also the OpenSource.org list of open source licenses, which is not quite the same as the freeware licenses.
Here are some questions people ask about the license: