As I understand them, anyway. There may some disagreement in the particulars, but most of it should be pretty straightforward.
Once a writer creates something, it is copyright from the moment it takes life upon the page. It does not need to be published, you do not need to register the copyright, and while it’s advisable to do so, you don’t even need to claim copyright on the frontispiece. No ifs, ands, or buts about it. It is not copyright free unless you waive copyright (or the copyright is expired, but if you’re breathing, it pretty much isn’t).
Free content is not necessarily copyright free, and for the record NONE of my free content is! Enjoy, but don’t copy or distribute it. It’s illegal, and it will make me cranky. It makes most authors cranky.
I do, when I’m sending out freebies, such as giveaways or ARCs, remind the recipients that the material should not be shared. I feel a little mean about that, but it is one of those behaviors that I think some people don’t realize is wrong, especially if they’re sharing with friends. Most people are going to realize uploading to a share site is unethical, especially if it’s not permanently free content, and if you don’t know it’s illegal to charge for someone else’s work there is something very wrong.
It’s also, for the most part, illegal to adapt someone else’s copyright work. Changing names, locations, and particulars is not sufficient. It seems obvious, but I think there are people who don’t realize that’s not a legal standard of substantively different work. And it’s being free, or unpublished, or several years old, or anything else, does not change that.
There are gray areas, and those gray areas can keep the courts very busy. Writers are magpies, and we pick up ideas in all kinds of places. Reading a book in which a character kisses a statue, and mentally telling yourself, “No! That’s not what happens when you kiss a statue, and that explanation makes no sense, and…” and writing a completely different story from that point is not plagiarism. There are only so many core tropes, and how different writers handle them is one of the joys of reading. Professionals, by the way, do police themselves against doing things like accidentally repeating phrases that were in something they read recently, or in a research book.
Writing someone else’s characters is one of those other things that can be confusing. I don’t personally really get the point of writing fanfic, and I don’t usually read it, but I don’t normally think of it as plagiarism in a hobby context. Writing someone else’s characters in a commercial work without permission is a copyright violation, despite some “interesting” claims of public domain. Hobby work is a little different, although some writers hate it, and I do think fans have an obligation to respect an author’s wishes in this regard.
I can’t imagine why anyone would want to, but personally, I have no objection to respectful hobby fic based on my characters. If you write Nick and Leon as Satanists, we will have a problem. And this relaxed attitude is ONLY towards non-commercial work, which is a different kettle of fish on many levels.