It's to disambiguate the english uses of the word "free." It's free as in freedom, not free as in beer. Libre (in French, as it is used in the acronym) only means the former.
Then why not call it LOSS? The F has to mean something, and if it doesn't mean libre it either means gratis or it's redundant and confusing. GLOSS could be a different thing, to differentiate it from PLOSS (paid libre open source software).
Free Software was coined by (probably) RMS to highlight how users of such software are getting a number of _freedoms_: namely those to use, modify and share that software onwards (with or without their modifications).
It is in opposition to "restricted" software where you are restricted in all of those. (Copyleft software restrict others from adding more restrictions, which is defensible but some BSD proponents disagree)
Libre is, as many have said, just the Latin word for Free. You'd still have to explain what it means in this context.
"Open Source" has similar problems: many think that it's enough for source code to be available for inspection for software to be called "Open Source", but it is just a another attempt to market a philosophy under a particular name.
These constructs are created to have a special meaning to promote an ideology, and are thus usually capitalized in English. This is nothing uncommon, and attempting to use these—now accepted—phrases to mean something else is bound to cause confusion. So, just like you learn what a "programming language" or "HyperText Transport Protocol" is (yes, one transfers a lot more than just "HyperText" over it), if you are in IT, one should learn what "Free Software" and "Open Source" mean.
Indeed, in Dutch we have "Vrij" (Libre, free as in freedom) and "Gratis" (a term I sometimes see used on international fora as well, meaning free, as in beer). Since English does not have this distinction Libre was used. I never ever associated it with Liberal.
With beer it's a bit special, because beers you didn't pay for have some freedom: they can decide to leave your stomach even against your will back the way they came :D
But if you paid for it, they ain't allowed to, of course.
It refers to the civil liberties kind of Free. You have the term "free” as in “free speech,” not as in “free beer”. The Libre makes it clear that the first kind of Free is referred to here.
Update: The distinction is important. It also entails that people should be able to earn a living by providing FLOSS software. Many people that don't know much about FLOSS think of it as the "Free beer" variant (something promoted by much of big tech, which is seemingly free). There can be good business models attached to FLOSS (though devs have a very hard time to monetize in practice).
I heartily applaud anyone trying to monetize FLOSS based on decent principles and values, rather than just bottom-line, willingly taking the hard road of founding a bootstrapped, sustainable business.
The issue is that the word "free" in English has two meanings, while other languages have two separate words for each meaning (gratis = free of charge, libre = free as in freedom). The reason why L means Libre is to emphasise that the "free" in "free software" refers to the libre meaning of the word "free", not necessarily the gratis meaning.
This is also what the phrase "free as in speech, not as in beer" attempts to disambiguate.
To add to the other answers, the acronym used to be FOSS. People changed it to FLOSS exactly because unethical corporations kept exploiting the confusion between "libre" and gratis on the English language to misinform people.
(Notably Microsoft had the gals to do it in its English PR and translate all over the world, including literal translations to Latin languages where both words are completely different.)
So in floss, that would be free free open source software.
Which doesn't seem right? Unless there is another meaning to libre I'm missing?