Free energy simulations compare multiple ligand:receptor complexes by "alchemically" transforming one into another, yielding binding free energy differences. Since their introduction in the 1980s, many technical and theoretical obstacles were surmounted, and the method ("MDFE," since molecular dynamics are often used) has matured into a powerful tool. We describe its current status, its effectiveness, and the challenges it faces. MDFE has provided chemical accuracy for many systems but remains expensive, with significant human overhead costs. The bottlenecks have shifted, partly due to increased computer power. To study diverse sets of ligands, force field availability and accuracy can be a major difficulty. Another difficulty is the frequent need to consider multiple states, related to sidechain protonation or buried waters, for example. Sophisticated, automated methods to sample these states are maturing, such as constant pH simulations. Meanwhile, combinations of MDFE and simpler approaches, like continuum dielectric models, can be very effective. As illustrations, we show how, with careful force field parameterization, MDFE accurately predicts binding specificities between complex tetracycline ligands and their targets. We describe substrate binding to the aspartyl-tRNA synthetase enzyme, where many distinct electrostatic states play a role, and a histidine and a Mg(2+) ion act as coupled switches that help enforce a strict preference for the aspartate substrate, relative to several analogs. Overall, MDFE has achieved a predictive status, where novel ligands can be studied and molecular recognition elucidated in depth. It should play an increasing role in the analysis of complex cellular processes and biomolecular engineering.