The Level of Free Convection, or LFC, is the height above which a lifted parcel becomes warmer than its environment and can continue rising on its own buoyancy, without any additional external lift. On a Skew-T, it is the point where the parcel's moist adiabat above the LCL first crosses to the right of the environmental temperature curve.
The physics
Below the LFC, the lifted parcel is cooler and denser than the surrounding air, so it is negatively buoyant. The area between the parcel path and the environmental profile in that layer is the convective inhibition, or CIN. Something outside the parcel, a front, a dryline, a boundary, or afternoon heating that first modifies the parcel itself, has to do the work of pushing it upward through that layer.
At the LFC, the parcel and environment reach the same temperature. Above that level, the parcel is warmer and less dense than the environment and accelerates upward. Everything from the LFC to the equilibrium level is the layer of positive buoyancy, and its area on the Skew-T is CAPE.
How forecasters use it
A low LFC, close to the ground, indicates that only a small amount of forced lift is required to trigger convection. Storms tend to form easily once any boundary or heating produces even modest ascent. A high LFC indicates a thicker layer of inhibition and usually means storms form only along stronger boundaries or after significant afternoon modification.
LFC height also matters for the character of the initial updraft. Storms building from a low LFC often have taller warm layers below the equilibrium level, which favors deep sustained ascent. Storms fighting up to a high LFC often initiate late, on stronger forcing, and can be more sharply defined and elevated.
Important limits
LFC depends on which parcel is chosen. A most-unstable parcel from an elevated moist layer can produce a low LFC in a profile where a surface parcel would show no LFC at all. The correct parcel is the one that actually feeds the storm, and that choice depends on whether the low-level flow is cold-pooled, cool and stable, or well-mixed to the surface.
LFC is also a purely parcel-theory concept. Real updrafts entrain drier environmental air, load themselves with condensate, and rarely rise as freely as an undiluted parcel implies, so the effective free-convection height for a real storm can differ from what the sounding shows.