Saw you guys discussing freestyling a couple of pages ago. Let me enlighten you.
Freestyling is when a rapper has created a rap verse beforehand to then later on perform it with whatever beat he/she is given. This is what most of the rappers have done when they call something a freestyle. Take Nicki's BET Cypher for example, that's a freestyle, since she was given the beat right at that moment.
Now, OFF THE DOME freestyling is when you completely make up a verse on the spot to whatever beat you are given. That's something that not a lot of rappers actually do, but actually is confused with doing.