WordPress.com is a propriety blog hosting service provider. WordPress.com is NOT directly related to WordPress.org which is home of the most popular open source CMS software, WordPress.
Even though WordPress.com blog hosting service uses WordPress at its core, there are several limitations to WordPress.com.
You cannot install plugins on your free WordPress.com site which is one of the best features of using WordPress. We have heard from many users who switched from WordPress.com to a self-hosted WordPress.org site because they did not want to be limited in terms of what they could do with their site.
You also cannot use custom themes on WordPress.com free plans.
On top of all that, you are limited in terms of monetization. You cannot use ad platforms like Google Adsense on your free WordPress.com site to make money from it. Instead, WordPress.com will show ads on your website unless you upgrade to their paid plans.
Update: In the recent years, WordPress.com has added the ability for users to install plugins and custom themes, but it’s only available on their Business plan which costs $33 per month (or $25 per month if you pre-pay for full year).
This is why most smart business owners just use popular WordPress hosting providers like Bluehost or SiteGround which give you all the power of WordPress without any restrictions for as low as $3 per month (basically you’ll save anywhere from 80% – 90%).