I really don’t think this is a difficult concept to grasp, to be honest.
The original work becomes public domain, and can be freely reproduced.
The characters therein are, and remain, the property of the author’s estate, and cannot be used in new work without their permission.
We are already seeing this in the real world, where Disney cartoons are public domain, but the characters, having been used in consecutive works, cannot be used by anyone other than them.
This allows a published work to be used for generations to come, but doesn’t allow an author’s legacy to be tarnished by less than quality adaptations.