Each site with a custom domain needs a Site Plan. Paying for a Site Plan is what gives you access to linking a custom domain to a site.
On a Free Account Plan you can have 1 or 2 sites in development hosted under the .webflow.io domain and not linked to a custom domain. They then use the Free Site Plan, also known as Free Staging.
With a paid Account plan, you can have as many site as you want under the .webflow.io domain. They then use the Enhanced Free Site Plan, also known as Enhanced Staging.
Enhanced Staging is way better than Free Staging. Free Staging only have 2 pages, no custom code, 20 CMS items. For Enhanced Staging, it’s 100 pages, custom code, 50 CMS items among other differences. Enhanced Staging is good for development, research, and for production landing pages that you don’t care having a custom domain attached to. You can also use them to download their code.
Edit: 22.04.2020 I made a comparative dashboard to quickly compare the plans : Understand Webflow Pricing: Sites & Accounts Plans