What is the actual meaning of "swag"?

There are multiple meanings. The most commonly used one nowadays is “stuff we all get,” meaning free things at giveaways or events. However, the original meaning is the way a piece of cloth drapes. It’s a swagging piece of cloth when it is hung loosely. We would often call it a draped piece or a swinging piece.

There are, again, multiple meanings to this word. It can be used to mean illegally gotten goods (where it means “stolen without a gun”) or it can be used to mean “sold without a guarantee” if something is sketchy. Truth be told, most think the original meaning is “secretly we are gay” from the 1960s. Wrong! Still makes a good story to tell, though.