Bedding improves the wood to metal fit of the receiver and makes the stock and barreled action one piece. It prevents the action from moving in the stock upon firing. It's done by putting epoxy with powdered fibreglass in the mixture in the stock where the receiver fits in the stock, then, with a release agent on the steel, installing the stock and letting the epoxy cure.
There is also 'pillar' bedding that uses a metal, usually but not always aluminium post, that is put into the stock so the receiver doesn't touch the wood. There are endless discussions about which is better.
Free floating means the barrel doesn't touch the stock at all forward of the chamber area. It allows the barrel to vibrate freely when fired. Some rifles shoot better when free floated, some with a small pressure point(a wee bit of bedding compound is used) just aft of the end of the forestock. It controls the vibration. There's no way of telling if a barrel shoots better free floated or not, except by trying it. The barrel channel of a wooden stock should be sealed to prevent the stock expanding in damp weather too.