I often read that some distributions contain non-free components while some other are free.
As an end-user, I don't understand very well the difference between free and non-free distributions.
The main difference is that with a distribution that only contains free components, you get access to all source code and the right to make improvements/changes to the code (with the right to distribute the modified version).
When there are non-free components, then for those non-free parts you typically don't get those rights.
What are the limitations of one compared to the other ?
When should I not use non-free distributions ?
There are no intrinsic limitations in one or the other, but it might be that some hardware components don't work (or don't work as well) without the non-free drivers from the manufacturer.
Or a particular application that you want to use is only available as a non-free package.
The main reason that people refuse to use non-free software is a philosophical/political/ethical one: They believe that all software should be available for study and modification.
As a reseller, can I sell an equipment with non-free software?
Can I sell an equipement with free software ?
That depends on the software in question. If you resell the equipment as-is, then you are likely fine, provided that the manufacturer has done his homework.
If you are the one that puts the software on the equipment, then you must check all involved licenses to see what your obligations are.
Free licenses don't require the payment of royalties, but may have the requirement that you offer your customers the possibility to obtain a copy of the code.