are there specific small towns in the midwest offering free homes/land as incentive to relocate to their town?

I find that to be highly doubtful. Maybe tax benefits like lower property taxes, but probably not free houses and free land. That would seen pretty desperate.

Nobody offers free homes/land. Most incentive programs target businesses which will create jobs! Without jobs available, people cannot afford to live there, pay property taxes, etc. Most business incentives include property tax abatement for a certain time period under certain conditions (% of the tax abatement might increase the more people they hire), or help with financing the land purchase or building the improvements (plant, factory, office building). Any community which wants to attract people must have a way those people can support themselves, and that means jobs available. Giving away land or houses does the community, its taxpayers, and the people who get the free home/land absolutely no good whatsoever. Jobs are the key.

Not that I know of, but there is lots of really inexpensive housing in small towns in Missouri and Arkansas.

Yes, I read about this a while back. It's in Atwood, Kansas.

http://www.atwoodkansas.com/free.html