Free Target type game allow to "shoot at terrain" allowing free casting/shooting/stabbing at any direction, only connecting hits where an enemy is located at the target location. Typically no auto-attack/auto-target exists:This is suited to tactical leaning games.

Auto-Target usually locks on some monster(tab target) or allows only valid targets in range(target locked,some spells might target terrain). The second system provides more casual/laid-back gameplay where targeting is easier and usually allows to set auto-attack/auto-target mode.
While Auto-target is more convenient it also reduces player engagement: at least option to switch to manual/free targeting should be provided(without holding modifier keys).