Yes, the Free Membership Level is there as a default. This is because every customer that signs up on your site needs a membership level in order for their login credentials to be saved in the system. So, if you are creating a Signup Form which only collects an email and password, then you will need the free membership level to create the account for those people who sign up. Additionally, if you set up your site to only sell bundles, or just shippable products, then MemberMouse will apply this default membership level to their account to ensure that they can log in to your site.
It is possible to change the default membership level to something other than the free membership and then delete the free membership level, but you do need some type of membership level as a default. And if you change the default membership to a paid membership level then anyone who wants to create a login on your site will also have to be a paid member.