How does the referee communicate with players in football(soccer) matches, when they are from different countries?

There is a clear code based on body movement and whistles for all game-relevant calls. It does happen for various reasons but unlike in, say, rugby, players and referee(s) don't really need to talk much. When a situation escalates, people also insult each other or shout in their own language and you don't need to understand all the nuances to get the intent.

Beyond that, many top players have international careers so that many teams would include one or two people speaking German, Italian, etc. and a few people speaking English obviously. If you know their biographies, you will occasionally notice a French player who had a stint in Germany chatting with a referee from Austria, etc.

They use they hands to communicate with players because the referee tells the players if its a free kick by blowing a whistle and showing his/hers hands.

FIFA referees are expected to be able to speak English. So if the referee who doesn't speak the language of a team (many international referees speak multiple languages) he will be talking English to them. Also notice that players know key words in English (if already not the same in their own language) such as sorry, foul, offside, goal...

Next thing you need to notice is that the referee will not just casually start a conversation with players. He will instruct players after fouls or controversial calls. So when a player commits a foul, he already knows what the referee will be talking about. Or when the referee makes a call that could go either way, he has a pretty good idea why the team that he made the call against them will be talking to him.

Another important fact is body language. The referees of FIFA, just like other governing bodies of international sports, use whistles and signals. So there is a distinct signal for each foul, just so everyone understands what's going on without having to translate all orders to different languages (think about the case when players of the same country speak different languages, then without use of signals, you would need multiple translators in all games). Even on top of that, referees try to use body language as much as possible to make everything clear for the players and coaches.