Every room has a different policy set to it (by the hotel).
A non-refundable policy means that a fee will apply if you decide to cancel or make changes to your booking. This fee is mentioned in the room conditions and in your confirmation.
Free cancellation means you can change or cancel your booking free of fees, if done within time period set by the hotel. This is written in the room conditions and in your confirmation (for example "Cancel up to x days" or "Cancel before dd/mm/yy hh:mm").