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The main restriction which is removed in freeform is the "invisible barrier" which surrounds the outer edges of the screen. This invisible barrier normally extends two combos from each edge of the screen, preventing Link from walking through them unless a passage has been set using the 4-way Doors tool. It also removes the automatic overhead layer, which extends one combo from the edge of the screen.
Since default doors are no longer used as the only entrance or exit from a screen (excluding tile warps), the way certain things are handled changes, especially on Dungeon Dmaps. For instance, when a room is entered, Link walks 2 combos away from the edge of the screen, regardless of what is above him, beneath him, or in his way.
Freeform is a feature usually associated with advanced quest design, as it allows more freedoms but takes more work to make functional. Another reason it is considered an advanced feature is because it moves away from the simple-but-specialized template features that ZC normally uses to make quests similar to the original Legend of Zelda, so the designer often loses the ability to do things the quick-and-easy way.