Free Text annotations draw a post-it style note (by default with yellow background) directly on the page on which they are created. To create a free text annotation select the free text annotation option from the popup menu and either click on a page, or drag a selection rectangle on a page. The first method will create a default sized annotation, the latter method will create an annotation sized according to the selection rectangle.
You add a static text box by clicking on a point on a page (without dragging to size the box). A new text box is created with the bottom left (origin) of the first letter at the position of the click. You can start typing straight away, and the text box will grow as needed to accommodate the text as it is typed. To exit typing mode, click with the mouse anywhere outside of the box. Static text boxes are often used to make minor corrections to a line of text on a page.
You can also add a text box by clicking anywhere on a page and dragging to size the box before releasing the click. In this case the text box will have a static size as you type. It will neither grow nor shrink.
An auto-resizing text box remains auto-resizable until you manually adjust its size by dragging one of the control handles when the text box is selected but not in typing mode. Once it has been manually resized there is no way to take it back to auto-resizing mode.