You can download DRM free books directly from the Touch's browser. To get to the browser (which is a beta part of the Touch), you go to Settings (three bars icon, top right of the home screen), then "Extras." Browser is at the bottom I think.
Free books are mostly public domain books. You can get them from (for instance):
http://www.feedbooks.com/publicdomain
http://www.gutenberg.org
Be sure to type the
http://www. into the Touch's browser, otherwise it won't work.
Or from the
http://www.kobobooks.com/free_ebooks – You don't need your Touch's browser for this, you can use the "Store" from the home screen and browse by free books category.
Unfortunately, you cannot download books that are protected (library books) directly onto the Touch. You will need a computer for that. The way it works is, you download a file instead of the book, and this file tells the Adobe software (on the computer) from where to download the actual book and that you have a license to view the book. The Kobo Touch is not able to process these files.