To the OP: "Free" dining is for the people who aren't smart enough to know that they aren't getting "something for nothing". Or for people who don't care that they don't get any WDW resort discount. They are paying FULL RACK RATES for their room night and full price on tickets. Would you pay full rack anywhere else? I don't.
Full rack rates are hundreds, sometimes thousands of dollars more (depending on the length of stay, resort choice) than they would pay if not for "Free" dining, or if they shopped around for decent discounts. It's basically a wash for the guest.
However Disney is very, very smart. They know full well the pull of the word "FREE" for those who don't know better. They know the word "Free" will fill resort rooms by those who aren't smart enough or who just don't care. Disney is a very profitable business because of this.
Unfortunately, I agree with a PP who feels that because of this, the restaurants are overrun, service is worn out and quality, in many instances, has declined. I don't care that I can't get "Free" dining, however since I am paying each time I go for the Dining Plan, I am resentful that MY experience is negatively affected.