When using public wifi, it's usually an open network where you can just connect. After that, you may have to digitally accept a term of service, or something similar. This is the breeding ground for identity theft, account theft, and getting your machine broken into.
The problem is that there is no encryption on an open network. Therefore, any data transmitted to or from your machine can easily be read, as plain text, from someone who doesn't even have to be on the network. Someone on the network can also initiate a Man in the Middle Attack, where they position themselves between you and the router/internet.
Firstly, the plain text problem. Anything you send over the air on an open network in an unencrypted channel can just be read. If it's an open network, and you're on a secure site (https://) then it's encrypted anyway. This still has its vulnerabilities, but I won't bore you with them here. Someone can sit nearby, not even on the network, and just record all of the traffic going to and from that router. Without you knowing that anything happened, they've made off with your credentials to every site you logged in to.
Next up, Man in the Middle. So, you start trying to go to Facebook, the man in the middle (MITM) picks up your request, and forwards it to the router as his own request. The router responds to the MITM, and he forwards that on to you. You log in, sending your email and password to the MITM (!!!) and he forwards it on to the router... this continues as long as the MITM wants. Now you see the problem -- Everything you sent goes through the MITM, where he or she can easily record it.
The best way to combat these is to sign up and use a VPN. A VPN becomes a tunnel where you're on the open network, but you're connected to an outside machine on an entirely different network, and this creates a secure tunnel. Sometimes this machine can even be in a different part of the world. The snoopers can only see you're sending data, and connected far away - but not what data you send. Note that these usually aren't free, and they can also slow down your connection - but they're cheap enough if you need to access your banking information or some other personal sites from public networks.
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