The original term "freewheeling" was related to device(s) that allowed power transmission shafts to rotate "freely" when its speed was greater
than that of the engine to which it was connected. In fact in the cars of the 20's and 30's a selector switch was installed on the steering wheel column allowing the driver to select the mode of operation, i.e., freewheel or not. When in the freewheel position "engine braking action" was disabled.
In electronics a diode is shunted across a coil. When the current thru the inductor is interrupted, a transient voltage appears across the coil. It's magnitude is determined by the relationship V=L(di/dt). The freewheeling diode slows down the di/dt transient by permitting the
current to continue to flow freely, or "freewheel", in the now isolated "loop" formed between the inductor and the diode, Thus, the current transient time to zero is increased, significantly reducing voltage magnitude.