GNU grep is licensed under the GNU GPL, which makes it free software.
The “free” in “free software” refers to liberty, not price. As some GNU project advocates like to point out, think of “free speech” rather than “free beer”. In short, you have the right (freedom) to run and change grep and distribute it to other people, and—if you want—charge money for doing either. The important restriction is that you have to grant your recipients the same rights and impose the same restrictions.
This general method of licensing software is sometimes called open source. The GNU project prefers the term “free software” for reasons outlined at http://www.gnu.org/philosophy/open-source-misses-the-point.html.
This manual is free documentation in the same sense. The documentation license is included below. The license for the program is available with the source code, or at http://www.gnu.org/licenses/gpl.html.