My suggestion for freeform? Read the thread so far, and make a note or two on what the world its in is like, then make a general outline of a character that would kinda fit in that world. For example, with the orb of shadows:
"Are you mad?", replied the barkeep, approaching the men from around the bar's edge. "He's as good as dead, and that metal sphere smacks of sorcery! It is an ill omen, and one that I will not allow to stay in my place."
This suggests that in this region of the world they're playing in, Magicks and sorcery is seen is a rare and wicked thing. So if you were to make a spell-casting character, it would be natural that your character would have his or her abilities hidden unless needed, lest you be seen as evil

Otherwise, you might want to make a character who thinks magic IS evil, and is uneasy around anyone who uses it.
But in all seriousness, in Freeform you can make up a character with just an outline of detail, and fill in the blanks as the game continues (Just so long as you don't conveniently make up things out of the blue

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Now i'm not too sure if Nap and Ria have been chatting in PMs or in the chatroom while they play out their roleplay, but it's possible they were talking a bit about their background beforehand. But it's also not completely uncommon to be surprised with unexpected information, so you sometimes just have to work with what's thrown at you by other characters

My suggestion? Take a stab at it! Throw yourself in with one of the games, and use this first game to experiment and learn. If you end up doing something wrong, the other players should give you a gentle nudge in the right direction - Not everyone in here is an evil, unforgiving beast. (Only me

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If everyone was expected to be perfect at this and never make a mistake, Strolen's citadel would have much fewer members than it does now

Anywho. to directly attack your questions:
How do you guys make your characters?
I don't know about the others, but once i read a freeform roleplay, I tend to give myself a few minutes to just think up a character on the spot. It's usually a good idea to give characters a couple good points (eg. athletic, dextrous, good with swords or whatever), a general personality (eg. aggressive, passive, friendly, reclusive, manipulative etc...), a general thought on whether he's superstitious or scientifically minded or religious etc... and of course, a flaw or two to shove in there (eg. a phobia of something, blind in one eye, deaf, racist etc...) Oh - and I sometimes like to have a hidden secret which may or may not ever get revealed in the roleplay

(eg. a woman who's only dressed like a man to fit in more, was once a noble but is now disgraced, or is the mayor of the town masquerading as an adventurer etc...)
How does it fit in with the game?
The thing about freeform roleplaying is that nearly anything can fit in as long as you follow basic rules (for example, don't make a spellcaster if you're in a world without magic). A character should have motivation to follow an adventure though. Whether it be greed, glory, a hidden agenda or otherwise.
Do you just make up some info and jump in?
Pretty much, yes

Just so long as you give it a little bit of thought, you'll be fine.
How do i know if my information is correct or not, and i'm screwing the game up or something?
Nearly anything you make will be fine. And if you're screwing up the game, someone will let you know - whether it be by PM or an OOC message in the game. We aren't here to pick out all of your bad points, believe it or not, but rather to work on your good points

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That's about all I can help you with. In summary: Give it a go! Have some fun! If it doesnt work out, learn from it and try again!