Free indirect discourse, most associated with Jane Austen, occurs when an author slides from the omniscient narrative voice (while setting the scene or explaining events) to inside the thoughts of one particular character. The technique tends to blur the distinction between the narrator's voice and the subjective voice of a character. One must be an alert reader, for the slide often happens within the confines of a single paragraph or even a single sentence. No quotation marks are put around the character's thoughts.
Forster uses this technique to give a quick summary of what has happened to characters who have been recently off stage or to set a scene and then to slide inside one character's subjective headspace. An example would be in chapter five of A Room with a View.
After a quick synopsis of Miss Bartlett and Miss Lavish's adventure, Forster then has his narrator explain Lucy and Mr. Beebe's thinking, then slides into the thoughts going through Lucy's mind. The phrase, "it was too dreadful" triggers us to know these are Lucy's thoughts:
It was too dreadful not to know whether she was thinking right or wrong.
A short time later, after some dialogue and some description of the blush of shame on Lucy's cheeks, we slide back into Lucy's thoughts:
How abominably she behaved to Charlotte, now as always! But now she should alter. All morning she would be really nice to her.
This type of writing allows for a fluid movement between external descriptions and internal thoughts in a novel.