Toad Data Modeler is a database modeling tool. In the product you can “draw” your database structure visually, specify many database items in detail and then geneate SQL scripts for one of the database platforms it supports. (Oracle, MS SQL Server, MySQL, PostgreSQL, DB2…) Advanced features include synchronization of model and database, model conversion etc.
Toad for Oracle requires physically existing database. The first step you normally do in Toad for Oracle is that establish a connect to your existing database and then work with it. It has its own ER Diagrammer, but the diagrammer allows you to visualize already existing tables only. It is not a modeling tool. In the Diagrammer you cannot visually add new attributes to tables - the way you do it in Toad Data Modeler.
Re limitations of the freeware version: Please read those two PDF files:
By purchasing the commercial version you will get the possibility to generate alter scripts (change scripts), generate reports in all available formats and of course, all restrictions related to max. number of items you can work with will be removed and you will be able to reverse engineer a database with more than 25 tables, generate SQL for more than 25 tables etc.