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I am confused a bit about these games. Need help..

It really just depends on the game. There are a lot free games, each trying to make money in different ways. Pretty much anything free (and even some paid) will be ad supported. Some games may allow you to play the full game if you're willing to put up with ads (Angry Birds for one).

If it's a paid game with a free version, the free version is often more like a demo, and you will have to buy the full version to access all levels, items, etc. Most paid games don't require any money past the initial purchase. Some may still include micro-transactions.

What's becoming more popular are free games with micro-transactions (pay a little bit for costumes, weapon upgrades, in game currency, extra lives, etc.). People often complain that these games are intentionally cheap and require spending money to advance.

You really just have to read the description for a game, and read through the comments.
 
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