To grade a free text question, assuming you are logged in as an Instructor visit the lesson's test and click on the Completed tests option (1).
This will get you to a tabular list of all completed tests by your learners in that lesson, which holds information about the users scores, when they have completed the test etc.
From the operations column click on the View option (2) to view details of a specific test for a specific user. This will get you to the completed test of the user, which contains all questions and user answers.
Click on the score value (3) to add a score for the users answers. Optionally, you may click on the Add feedback link (4) to provide some feedback for your learner regarding this question.
When you click on those links a input field will appear for you to provide your grade for the answer and optionally some feedback.
When you have done grading the learner's answer click on the OK button to submit your grade.