Why the floor and the wall are allowed to move differently
A foundation wall bears on a footing set well below the frost line and barely moves. The slab inside it sits on compacted base a few inches down and responds to the ground under it more directly, expanding and contracting a little with temperature and moisture. Tie those two rigidly together and the one that moves more drags on the one that does not, and something gives, usually a crack right at the joint. A floating slab is built to not fight that difference.
What separates it from the wall around it
An isolation joint runs the full depth of the slab everywhere it meets a wall, a column, or a footing, filled with a compressible material instead of poured solid. No steel crosses it. The slab sits on its own base, finished level to the wall around it, but structurally the two are not one piece. On a garage or basement floor, that joint is the line between the floor and everything around the edge of the room.
The opposite move, and where a floating slab actually shows up
A monolithic pour ties the floor and the thickened foundation edge together as one piece, poured at the same time. That is the right call on a simple slab on grade building where the floor is doing some of the foundation's job. A floating slab is the call when the wall or footing goes in on its own schedule first, commonly a basement or a garage on a stem wall, and the floor follows later as its own pour.
A basement floor poured weeks after the walls have cured and been backfilled is a floating slab. So is a garage floor going in over a footer and stem wall that was formed and poured separately. In both cases the wall work finishes, the site settles, and the floor comes in on its own schedule and its own line, priced and poured as its own piece of work rather than folded into the wall or footing above it.
The base underneath still has to be right
A floating slab is not carried by the walls around it, which means the ground straight underneath it is doing the actual work of holding the floor up. Compacted stone or subbase under the slab matters more here, not less, because there is no rigid connection to a footing to fall back on if the base settles unevenly. A floor poured over soft or loose fill without addressing it first is where a floating slab earns a bad reputation it did not deserve. The slab did what it was designed to do. The ground underneath it did not.