Essentially, it has to do with the potential demand inherent in offering free downloads. Remotely Hosted Downloads require additional transfer bandwidth, temporary cache storage, and other overhead to pull the file from your server to our Web cache -- which cloaks the file's "real" remote URL and allows us to enforce your link-expiration settings -- before it streams to the buyer. For this reason, we do not permit using that feature for free downloads which may draw exceedingly high demand, incurring overhead costs far exceeding what the merchant is paying for their plan level.
We have no problem meeting the more modest demand for actual paid downloads pulled from a remote URL, and free download files actually uploaded to our server would at least be covered by a plan level commensurate to the file size(s) being stored and the overhead required to meet that demand. This prevents abusive sorts of scenarios where, say, someone paying us only $18/mo could offer a 2 GB remotely-hosted movie file which they're promoting far and wide as a free download with massive public response. We used to require a 0.99 price, but some musicians wanted to sell some mp3s for less, so we decided 0.10 was a reasonable "token price" that potential downloaders would still regard as a "real purchase".
If you just want people to download a file for free and don't need to issue each person a unique link that expires, then you can just upload the file to your Web site or other file-hosting server and make a link to it, just like you'd make a link from one page to another. See this page for more information.
