I'd say this game is a pay-to-win game. It's not necessary to pay for anything to be able to play the game, like it was at some points (e.g. when you lost dmg and healing bonus without incense, and it wasn't available to get incense from quest).
However, the word is "p2w", which means pay to WIN and is mainly related to PvP I guess, and I believe you will have to pay if you want to win in PvP or outdamage people in PvE. In PvP at max level you will encounter a lot of players with high leveled runes, Patronage level 5, high leveled trinkets, additional rubies, talents and stats, etc. All this is gained from Boutique for real money, however, much of it (or components for it) can be bought from other players in AH as well, but if you wanna walk that path you better prepare for infinite gold farming for hours a day.
Yes, I know there are hardcore players out there who might be able to get all these items only for gold, in a slow phase. Everyone doesn't have that much time however, if you have a job and a life outside the virtual world you won't be able to spend time on anything else in the game if you spend hours on gold farming every day.
The good thing with playing on the free-to-play server tho is that once you've bought all the neccessary things, you won't HAVE to spend anymore money on the game, at least not until a new item that gives you advantages in PvP is released. Prepare to spend a lot of money if you're a new player though.