Free indirect discourse is when the point of view slides from third-person omniscient narration to inside the head of a particular person in a story without indicating the change. Jane Austen is the writer most famous for using this technique.
Though James Joyce is most associated with stream-of-conscious, which attempts to mimic capturing a person's thoughts as they flow through his or her mind, Joyce also uses free indirect discourse in his story "The Dead" in Dubliners. In the passage below, Joyce slides from omniscient narration to Gabriel's thoughts.
Gabriel's eyes, irritated by the floor, which glittered with beeswax under the heavy chandelier, wandered to the wall above the piano. A picture of the balcony scene in Romeo and Juliet hung there and beside it was a picture of the two murdered princes in the Tower which Aunt Julia had worked in red, blue, and brown wools when she was a girl. Probably in the school they had gone to as girls that kind of work had been taught for one year. His mother had worked for him as a birthday present a waistcoat of purple tabinet, with little foxes' heads upon it, lined with brown satin and having round mulberry buttons.
First, we are told that Gabriel's eyes are irritated, and we can watch him from afar, as if he is being filmed, as his eyes wander to the wall. In the first half of the next sentence we are also outside of his head, watching with him as he looks at the Romeo and Juliet balcony scene. So far, we are viewing him from the outside. Then we slip into his thoughts as he looks at the embroidered pictures hanging on the wall. It is the thought flowing through his mind that the picture of the princes had probably been worked by Aunt Julia as a girl, and that idea leads him to think of his mother. If this were a movie, the thoughts in his head would be filmed as a flashback, perhaps in a hazier light to indicate the shift.