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How do hosting companies get domains to sell to users? I want to know how web hosting companies get their domains to sell and do they get them free.

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The ICANN (Internet Corporation for Assigned Names and Numbers) distributed the right of an Top-Level-Domain to the registry. E.g. the registry of .io-domains is nic.io. The nic.io-registry has the permission to give users/reseller an domain. The Hosting companies get the domains from a big-reseller e.g. key-systems, internetx, etc. or get the domains directly from the registry. Any domain-action like create, update, renew can be billed to the customers. The billing schema is different to any registry.