It's "free" as in "not a monthly charge". The old Kindles had no Wifi-only option, so the price for 3G was already factored into the cost of the device ($399 for 1st generation, $259-359 2nd generation). The 3rd generation was the first to introduce Wifi-only models, and it came in two flavors, a cheaper one with wifi and a more expensive one with wifi and 3G. That's continued throughout the line ever since.

Similarly, the price for ad-free experience was also already factored into the cost of the device, but now is separate for those people who don't mind seeing ads for a lower price (or can't afford the $20).