The free state means that all info related to that state is free with the software. So when you fill in the data requested by TurboTax for your state taxes, the first state you choose is free to download. To download additional states costs about $45.
The e-filing, however, is a separate issue. Federal e-filing is free but states require a fee. I've been filing with TurboTax for quite a while now and it's been that way for years. You can skip the fee and simply mail in your return if you like. Turbotax will give you the address of where you need to mail it if you go that route.
