Most People play on free Server - as you may know it was there before subscribtion Server. There you have the Cash Shop and many items that will make playing more comfortable. But also you have to play against heavy Cash Shop users and you will have absolute no Chance in no Way. Only way to head up is to spend an unbelivibal amount of money or as some claim you have to spend a lot of time to farm (months/years). Also every Patch brings new Items and Mounts, what means even if you spend a lot of money you will have to do this every patch to reach the maximum. But you will not be alone with low Cash Shop items or Runes. Most players don't have all Items or higher Runes than lvl 8. If you don't want to be the absolute Top Player in your Class it is totaly ok to play on free Server.
The population on pay Server is much lower but there is a population. Here you can play without Cash Shop which means you will not be able to get many upgrades or things that will make playing much more comfortable. They simply don't exist there. On pay Server the Endcontent is not doable. I am talking about Raids. You can only beat the Endcontent from a previous Patch.
The great adventage is PvP on pay Server. Here your Skill and Equipment is everything you will have. Sounds good but in Allods the class balance changes from Patch to Patch. So there are always totaly op Classes. But at least no Runes or other upgrades.
If you just want to play the Game and don't minde that much about Endcontent Raids this should be the right place for you.