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Monads provide substitution (fmap) and renormalization (join):

m >>= f = join . fmap f m

A free Monad is one that does no work during the normalization step beyond simply grafting the two monadic values together.

[] is not a free Monad (in this sense) because join [[a]] smashes the lists flat.

On the other hand, consider:

 data Tree a = Bin (Tree a) (Tree a) | Tip a

 instance Monad Tree where
   return = Tip
   Tip a >>= f = f a
   Bin l r >>= f = Bin (l >>= f) (r >>= f)

This Monad is the free Monad of Pair:

 data Pair a = Pair a a

And we could make an instance of MonadFree for it directly:

 instance MonadFree Pair Tree where
    wrap (Pair l r) = Bin l r

Or we could choose to program with Free Pair instead of Tree and thereby avoid having to define our own Monad instance.

Moreover, the kan-extensions package provides MonadFree instances that can improve the asymptotic complexity of code that constructors free monads by effectively reassociating the use of (>>=).

See Free for a more formal definition of the free Monad for a Functor.