The dog owner who has not put their dog on a lead is worried that the owner who has put their dog on a lead is cosidering them to not be in adequate control of their animal.
Likewise the owner who has their dog on a lead may feel they are not giving the dog enough freedom.
Normally resolves itself in one of 3 ways.
1. The non leaded dog owner says 'He's friendly' and the comment is confirmed by the dogs behaviour.
2. The non leaded dog annoys the leaded dog, the leaded dog owner expressed disapproval and apologies are made usually ('Hes normally SOOOOOO friendly!')
3. The owner of the non leaded dog puts their dog on a lead.
'Sorry mate. Lead differential!'