The practical difference is market access, not ownership — both routes now allow 100% foreign ownership for most activities.
A Mainland company is licensed by the emirate's Department of Economy and Tourism. It can trade directly with customers anywhere in the UAE, bid for government contracts, and open branches across all seven emirates.
A Free Zone company is licensed by one of the UAE's 40-plus free zone authorities. Setup is usually cheaper, packages often bundle a fixed number of visas, and there may be corporate tax advantages if your income profile qualifies. Selling directly into the mainland market typically requires additional licensing or a distributor.