Use loaf touring free state (7)
I believe the answer is:
florida
'state' is the definition.
(Florida is an example)
'use loaf touring free' is the wordplay.
'use' indicates an anagram.
'touring' indicates putting letters inside (touring can mean going round).
'free' becomes 'rid' ('rid' can be a synonym of 'free'**).
'loaf' is an anagram of 'floa'.
'floa' placed around 'rid' is 'FLORIDA'.
(Other definitions for florida that I've seen before include "the Tallahassee area" , "US Sunshine State" , "American state, capital Tallahassee" , "bordering Alabama and Georgia" , "Everglade State" .)