The freewheel is a ratcheting mechanism, that coupled with a set of gears, is that threaded onto the rear hub of a bike. The freewheel allows the rear wheel to engage and move when the pedals are spun forward, but coast freely when the pedals are stationary or spun backwards.
The freewheel together with its associated gears is referred to as a cluster. The freewheel serves the same purpose as a freehub although they are mechanically different and cannot be readily interchanged.
A discussion of the difference between a freewheel and freehub can be found on Sheldon Brown's website: Traditional Thread-on Freewheels
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