The goals for the projects are different.
Velocity's goal is to keep templates as simple as possible, to help maintain a segregation between logic and presentation, so you don't slide down the slippery slope of sticking code in templates. Sometimes this is the right thing. Of course, sometimes being able to wire complicated logic directly into templates is the right thing.
Velocity doesn't get frequently rev'd, but that doesn't mean it's not under active development. The user community is large, the code is fast and stable, the syntax is basically fixed. Over the last several years Freemarker has undergone churn on the template syntax and api side. Sometimes it's nice to leave well enough alone. Again, depends on what you're looking for.
Freemarker's documentation is much more extensive- and it's a much more complicated piece of software.
Many of the use cases for Freemarker boil down to wanting a complex templating workflow and not wanting a compilation step. In recent years, rather than struggle through this with Java I've just been using Python or Ruby instead.
