You can let her sniff around, it would be hard to stop a Cocker doing that
Free hunting is when the dog pleases itself and goes off following its nose willy nilly, doing its own thing and ignoring you. At 12 weeks old I would very much still be letting her be a puppy and would just be working on building up a bond with her and getting her used to focussing on you by making yourself interesting to her which means lots of running around with her, play, games and praise. All I would look out for is her going too far from you at this stage, if you're training a dog to work you do have to limit their freedom somewhat but it doesn't mean that they get none at all. You want to keep her within a reasonable distance and work to keep her attention on you so she doesn't start to get into the habit of looking for her own entertainment.