Just like it says, how many free actions can a person do in one round. My house rule is: As many free actions as Dex modifiers. My players say only one per round.
BTW if your players says limit of one per round, I hope there's no archers among them or else they would find the "rapid shot" feat pretty useless. Pulling an arrow from a quiver is a free action...
Guidelines would be nice, but there aren't any. With rapid shot a 16thlevel fighter could get five free actions with quickdraw, to draw daggers and throw them.
Do you know what free actions the demon would want to take?
If you're thinking about the demon's spell-like abilities, keep in mind that "at will" does not mean a free action. That only means there's no limit on the number of uses per day.
Spell-like abilities always take a standard action to activate.