In former times, impeding the progress was one of the reasons for an indirect free-kick. It did not matter whether an offender made physical contact with his opponent or not. As soon as the referee deemed him to be unfairly impeding the opponent's progress, he had to award an indirect free-kick in theory - in praxis, this rarely happened, though.
This has changed. In the new Laws of the Game, the IFAB has clarified and declared the following principle:
At the beginning of Law 12, it says: "If an offence involves contact it is penalised by a direct free kick or penalty kick."
Obviously, this has an effect on impeding the progress of an opponent. It is now split into ...
a) impeding the opponent with contact: DIRECT FREE-KICK
b) impeding the progress of an opponent without any contact being made: INDIRECT FREE-KICK.
In the following situation, the referee awards an indirect free-kick in favour of the attacking team which is indicated by his raised arm gesture. Actually, a direct free-kick should be given, though:
This is a good example of incidents where a direct free-kick should be given due to the physical contact being made. Same goes for the following video, where two players were impeding their opponents with contact:
So, keep in mind: Contact = Direct free-kick or penalty, No Contact = Indirect free-kick.