If you have an enormous addressable market then it can pay to build awareness as quickly as possible. Having lots of enthusiastic users will do that. Having a useful free tier is a pretty uncontroversial way to get those users.

Plenty of apps do this - looking at the first browser tab I have open I see gmail which does exactly this.

For a pure client app like an iphone app, you don't have any real "per user" costs, so there are no concerns about going under from the costs of attempting this. It would be very different if you had to pay for server capacity.

correct. never optimize your product, just wait to see if it's a success or not.