"Potential free" or "dry contacts" are used when the device being controlled has its own power supply. For example, most VFDs have a 24 VDC power source in the drive that is used to control starting the drive. The external contact used to start the drive is a dry contact, and it switches the voltage supplied by the VFD to let it know it should begin running. Closing the dry contact connects the drive input to the VFD's 24 VDC and powers the drive input. The internal devices sense the voltage, start the drive, and the current and voltage is returned to the VFDs own power supply "-" through internal circuitry.
The term "potential free" is only in reference to the control contact when it is not connected to an external device. Obvioulsy, during operation, there must be potential or voltage passing through the contact or nothing can happen.
This term is meant to differentiate between a dry contact, powered extenally, and a contact that is connected to a voltage source inside the control system that is sent to an external device. An example of this would be a PLC output that uses the PLC's own 24 VDC power, and when the contact closes this voltage is connected to an external "unpowered" load such as a relay coil.