Green’s Dictionary of Slang

1. to create spontaneous rap rhymes, without prior preparation.

1994		Source May 55: When I freestyle, I’m thinking about the next three lines, before the first is even finished.
2000		W. Shaw Westsiders 37: Younger rappers burst into occasional bouts of freestyling — ad-libbing rhymes — trying to impress the star.
2021		J. Fenton We Own This City 37: Jenkins loved rap music and ‘would try to freestyle battle other officers and even citizens.

2. to act in a spontaneous manner, to live by one’s own rules, to wear one’s own styles of clothes etc.

2002

‘Touré’ Portable Promised Land (ms.) 156: We Words (My Favorite Things) [...] Bumrush. Baadasss. Buckwild. Hepcat. Freestyle. Roughneck.