For many Free Culture is the logical extension of the Free Software philosophy applied to cultural and artistic work, initiated in the mid eighties by Richard M. Stallman. The term "free culture" itself was originally the title of a 2004 book by Lawrence Lessig, considered a founding father of the free culture movement. Mr Lessig has indeed successfully channeled this natural evolution into a dedicated movement for people who cared little about writing software and created licenses specifically tailored for work of art rather than software.
In practice this means that a movement of people have decided to create and make available their art, allowing others to freely use, study, distribute and improve on the work of others. Redistribution of those improvements are of course allowed and encouraged.
One could "even" consider the Free Culture movement as a group of individuals and organizations building a body of work for society to benefit from freely without all the current locks that are being put on modern (and less modern) culture (copyrights extensions, attempts at suppressing the 'fair use rights', etc) by the media industry.
One can find a complete definition on Freedom Defined website which goes through an extensive explanation of the various freedoms needed for a work of art to qualify and what to more specifically pay attention to.
To summarise, since all creative work can be considered as a derivative of something an author has experienced (studies, reading, traveling, his friends' lives, etc); Free Culture is really just acknowledging it and providing society with the same rights.