The first misconception you may have is that shareware and freeware are types of software programs, when they are actually methods of distributing software. Shareware developers are hoping that you'll help them with their word of mouth advertising, and it has become so popular that even the large software companies are offering some kind of shareware or freeware.
There are now several different types of "wares" that are used, and having an understanding of them will help you in deciding which software you may or may not want to download.
First of all, most shareware and trial versions are virtually the same. Both are free to download and try, and both will have a fee to continue using after a certain amount of time. These softwares can be scaled down or earlier versions of another software, or ones developed for marketing purposes. Shareware marketing has advantages for both the customer and the author. As the customer you can "Try Before You Buy" and many times you will receive free access to personal support and service thru the developer's web site. The software developer receives word of mouth advertising and direct feedback from the customer. Shareware developer's use to offer programs on the honor system, but this type of distribution is now called Freeware.
Freeware is just what the name implies; software that is free to download and use for as long as you like. Again, these too can be scaled down or earlier versions of other software. There is also the demonstration version, which can be a slideshow of what the program does, or a disabled copy of the program.
Free doesn't necessarily mean you can do anything you'd like with the software. Most shareware and freeware is copy righted, and the program cannot be altered, sold or distributed without the author's permission. There are, however, some freeware packages that do encourage further development of their programs; these are called open source programs. Some are on-going projects that combine the collaboration of many developers and are aimed at offering better alternatives to some of the old standbys.
Open Source Directory by O'Reilly Publications
Things to Watch Out For
There are a few things you should watch for when downloading shareware and freeware. Both have been know to contain spyware and adware, so you will want to have some kind of program to check for this. The one I use is Ad-Aware by Lavasoft and is very well known, but there are many out there and you should look into one if you download alot of programs. Before downloading also check the software using the Spyware-Guide.com site, they maintain a searchable database of programs that have been checked for spyware and adware, and have supplied this search box that can be added to any site.
Lastly, watch the term "free download", it can be misleading; some web sites use this to imply their software is freeware, when it may actually be a demo or disabled version. Do a little research before you download, you may save yourself time and trouble.
Shareware has changed many times since the first personal computer came out, and it has developed to include a very wide range of quality and selection. Single developers who program in their free time offer Shareware, as do large companies who give it away as freebies. I've found some of the best shareware comes from the smaller company whose people are involved and enthusiastic about their products, and can offer a hands-on approach to service and support.