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Yep. We can look at the source to see what their metrics are. They have economic freedoms and personal freedoms.
The metrics for economic freedoms they used are fiscal and regulatory freedom. Focusing on fiscal, that branches down into: state taxes, local taxes, government spending, government employment, government debt, and "cash & security assets." It's obviously a libertarian based definition of "economic freedom", wherein they feel someone with $5 to their name and no obligations is more economically free than someone with $100 to their name and $10 of taxes. Completely illogical bullshit.
But you can look at it and see that a lot of them are incoherent or intentionally overlapping even if you buy into their base ideology.
Why are government spending and government taxation separate entries? Is someone with low taxes less "economically free" because their government budget is able to afford to be larger anyway? Why does government employment factor in at all? Surely — especially after you've accounted for any budgetary, taxation, and debt based impacts — there's nothing inherent to government employees existing that can be argued to impact someone's "economic freedom." Even within their base libertarian fantasies, the overlap and design of the categories will specifically make a richer, but otherwise completely identical, state less free than a poorer copy-cat.
The rest of their categories are even more bullshit. They have an entire section under personal freedom categorized as "Travel Freedom." A sane person might define that as both the right and the capacity to travel places. They define it as "This category includes seat belt laws, helmet laws, mandatory insurance coverage, and cell phone usage laws." So a state is less "free" according to Cato if it makes it illegal to text while driving.
tl;dr it's all libertarian bullshit.