I like to read in bed at night. why are we using "in" before bed. why are we not using "on"?

In is used here because you're in the specific area of it. Here you may be under the blanket or covering yourself with other thing...

because that time I have free

l like to read in bed at night = It means you are covering up yourself with a blanket. I like to read on my bed at night = It means you are on the top of a blanket. Either way it is correct , but "in bed" is more appropriate.