Man, I get a buzz hunting down free fantasy I can actually read without worrying about copyright — it feels like finding little hidden treasure chests. If you want classics that are 100% legal, start with Project Gutenberg, Standard Ebooks, and Feedbooks' public-domain section. You'll find golden oldies like 'Alice's Adventures in Wonderland' and plenty of myth and folklore retellings there, all in multiple formats. I love Standard Ebooks for the clean typography; it's like holding a lovingly typeset indie book even when it's free.
For newer or contemporary free stuff, don't overlook Baen Free Library (great for space-fantasy and sword-and-sorcery), Tor.com's short fiction page (they publish top-notch free novellas and stories sometimes), and Smashwords — use their search filters to show only free works by indie authors. Royal Road and Wattpad are brilliant for serials and original web novels, and most authors post there under legal terms. Also check authors' own websites and mailing lists — many give away the first book or short stories to build readership.
Finally, treat your local library like a secret weapon: Libby/OverDrive and Hoopla offer tons of fantasy ebooks and audiobooks for borrowing, legally and for free if you have a library card. Librivox is perfect if you want public-domain audiobooks. I usually grab a few freebies, support the authors I love with reviews or purchases when I can, and use Calibre to keep my little digital library neat — it makes the whole treasure-hunt feel even more fun.