This phrase is usually used when someone presents something that they've created, probably one that took a considerable amount of time, and another person believes the time that it took to create was a waste of said time. You have no idea if the person creating the object had a lot of free time. Maybe they were extremely diligent about the little free time that they have and had the commitment to work on something for days and days and days.
I don't have a lot of free time. I work a full-time job. I commute around three hours a day. I have a family: a wonderful wife, a wonderful baby boy, a dog, and two cats. I have a mortgage to pay. I have a house to maintain. I wake up at 5:00am every morning so I can still walk the dog or put in a 3 mile run before work. Where is all this free time that I supposedly have? I'm just pretty good with time management and have the conviction to work on creating things. There's no "I wish I could find time to work on..." because I wouldn't get anything done. Just do. Even if you can work on something an hour a week, you got to work on it.
If someone puts in 30 hours on a painting or recreating their favorite pixel art in Minecraft, they've spent their time working on 1) something they enjoy, 2) a hobby, 3) actually creating something with their time. That's great! Now if what you want to do with your free time is to put in 100 hours into a game or watch a whole season of Red Dwarf, that's great too. But that same person playing tons of Battlefield can't come around and denounce someone else's use of their free time making an embroidery sampler just because it's something they couldn't see them selves committing their free time or dedication to do.
Well, I suppose they could. It's a free country. They can say whatever they want. But I don't like it.
Now if you're shirking off your responsibilities to work on a hobby or whatnot, that's different. That's not using your free time on something productive or creative. That's converting time that's meant for something else into something it's not supposed to be.
Some tips on how I find time to design or code or draw:
1. If you take public transportation, you can likely get in some time on your computer. That's to say you get a seat.
2. I take my lunch hour and work on things of my own. That's at least 5 hours a week.
3. After dinner, taking care of chores, and whatnot, I want to relax and maybe watch some TV with the family. It's also ok for me to listen to TV while I work on something else.
4. Wake up earlier. Even 15-30 minutes a day gets you some private time to work on stuff.