λ is a binding operator, just like backwards E ("∃") or upside down A ("∀"). Consequently, it always binds something (a variable), taking scope over some expression that (usually) contains occurrences of the bound variable. More practically, λ always occurs in the following configuration:

(λ var body)

Here, "var" is the variable bound by the lambda operator, and "body" is the constituent that the lambda operator has scope over.
For instance:

(λ x (* (+ 3 x) (- x 4)))

Here "x" is the variable (the one immediately after the binding operator), and the body is "(* (+ 3 x) (- x 4))". The body contains two occurrences of "x", and both are bound by the λ operator; any variable token that is not bound is free.
(λ x (* (+ y x) (- x z)))

In this form, the tokens of "y" and of "z" are both free.
Freedom is always relative to a particular expression. If the preceding expression is embedded within a larger one, the free variables can come to be bound:

(∃ y (λ x (* (+ y x) (- x z))))

In this case, the "y" has been bound, and only the "z" remains free.

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