The license is considered free by the Free Software Foundation, which states that a simple hello world program is enough to satisfy the license's requirement that fonts using the license be distributed with computer software when selling them. The Debian project agrees.
The Open Font License is a free software license, and as such permits the fonts to be used, modified, and distributed freely (so long as the resulting fonts remain under the Open Font License). However, the copyright holder may declare the font's name as being a "Reserved Font Name", which modified versions then cannot bear. The License permits covered fonts to be freely embedded in documents under any terms, but it requires that fonts be packaged with software if they are sold.