Am I eating a free lunch?

It’s quite easy to answer that.

Google business is about indexing information. That means, for example, providing what you are looking for when you search something at google.

Blogs are full of information. Part of this information are new contents (wich is valuable itself), but most part of this information is already somewhere else in books, newspapers or other internet pages, forums, etc…
Google can index all this data with their spiders but it’s difficult for them to differenciate which information is useful and which is not. When you are linking (or even just referencing) something in a post in your blog, you are telling google that this resource is relevant for you (a human) so that can help them to improve the accuracy of their search engine.

P.D: Sorry for my poor english :(