Fair use. This topic seems to crop up a lot. Where can I use copyrighted materials in my documentary / movie? What is the difference between royalty free and public domain? Etc. etc.
Well, here is a nice guideline:
Now, with online video proliferating with sites like YouTube, the rules are being revisited. You can check them out HERE.
As to the answer regarding royalty free and public domain, you can think of it like this:
Royalty Free: Generally speaking, it means that you may use the content in your own projects however you see fit and never have to pay any royalty to the copyright holders. However... Royalty free agreements can differ between providers. Some may stipulate that you may use it only for not-for-profit. Others will say it's for use in your own projects in any way that you see fit but you cannot re-sell the material on it's own and so on. Be sure to carefully read the Royalty Free licensing agreement for any content that you plan on implementing.
Public Domain: In a nutshell: Public domain comprises the body of knowledge and innovation (especially creative works such as writing, art, music, and inventions) in relation to which no person or other legal entity can establish or maintain proprietary interests within a particular legal jurisdiction. This body of information and creativity is considered to be part of a common cultural and intellectual heritage, which, in general, anyone may use or exploit, whether for commercial or non-commercial purposes. Only about 15 percent of all books are in the public domain, and 10 percent of all books that are still in print.
If an item ("work") is not in the public domain, it may be the result of a proprietary interest such as a copyright, patent, or other sui generis right. The extent to which members of the public may use or exploit the work is limited to the extent of the proprietary interests in the relevant legal jurisdiction. However, when the copyright, patent or other proprietary restrictions expire, the work enters the public domain and may be used by anyone for any purpose.