Guided wave radar uses a principle of Time Domain Reflectometry which a radio frequency pulse is sent down a wave guide (wire) that hangs in the container that level is being measured. When the pulse reaches the level interface (surface of what is being measured) a portion of that pulse is reflected back to the transducer, which convert the time it takes for a return pulse to a level.
Free space radar is also a radio frequency device but it does not use a wave guide. It also will convert the time it takes for a return pulse and convert it to a level.
The above are just brief explanations. For more in-depth explanation, see the manufactures websites. I typically have used the Rosemount models of these instruments and if you go on the Emerson website, you can find white papers on both of these types of instruments.