How to turn off free downloads password

If the option is disabled, its because you have turned on Screen Time restrictions for it at some point.

Go to Settings ➜ Screen Time ➜ Content & Privacy Restrictions ➜ iTunes and App Store Purchases ➜ Require Password and make sure its set to "Don't Require".

Then go back to Settings ➜ Apple ID ➜ Media & Purchases ➜ Password Options and you should be able to turn the option off now.