With download speeds becoming faster each year, more and more people are looking to download entire movies from the Internet. It can be difficult to find a good place to find films that are both legal to download and free. If you know where to look, though, you can easily find thousands of quality movies for free and legally online.
The Hard Truth
You can't download the latest blockbusters both for free and legally from the Internet. You can obtain them freely but illegally (via most P2P networks), or legally but not freely (at places such as Movielink and CinemaNow), but both together simply doesn't happen. Ironically enough, most flashy websites claiming movies with both these characteristics, while technically offering both, in actuality offer neither. They claim to be free (since you aren't paying per download), but you still incur a monthly or yearly charge, and they claim to be legal (since they don't host the downloads on their own site), but you still are likely breaking the law to download from the outside sources they direct you to. Avoid such scams.
It is possible to download movies freely and legally online as long as you're content to watch old or independent films. Archive.org contains a massive collection of free and public-domain media, including thousands of old movies, propaganda films and documentaries. All of Archive.org's films can be watched in your browser or downloaded for free.
If you wish to download movies legally using your peer-to-peer software, you can easily do so if you know where to look. Public Domain Torrents hosts torrents of hundreds of classic films and B-movies in every genre. Legit Torrents is another site that only offers legal content and has both movies and every other type of media available.
Recently, a number of open-source films have been created with licenses similar to those of open-source software. These films are all both free and legal to download and range from philosophical independent movies to Pixar-quality animated shorts. See Wikipedia for a list of open-content films.
Free to Watch
Many other sites legally allow you to watch films online, but not download them. Two popular sources are Hulu.com and IMDB.com. While neither of these host major recent movies, you are likely to find more modern films at websites like these than at Archive.org and legal torrent sites.