The way that works is that you sign up to be an affilliate. As an affilliate the sponsor (the site you signed up to promote) will give you specific clips from larger vids on their site.
You can put these clips on your site and offer them for free to your visitors. Around those video clip links will be advertisements for that sponsor (where your visitor can get the full vid or other similar vids). If they click the link and join the site, you make money.
Basically a free site is simply free samples. A lot of surfers are just interested in the samples, but others will decide they want more. Your sponsors will give you the free samples for you to give to your visitors. You can only use what they give you permission to use. Most will help you if you need something specific.
One of the best ways to start out is by creating galleries and submitting them to other tgp's. Then create a tgp of your own. It's a long explaination which shouldn't be covered in a thread here. You can learn more by using google, looking through the forums here, or by looking at the tutorials at
http://www.tgpfactory.com