How does Microsoft Product Activation work?
Product Activation works by confirming that the software’s product key, required as part of product installation, has not been used on more PCs than allowed by the software’s licence. Product key information in the form of the product ID is sent along with a “hardware hash” (a non-unique number generated from the PC’s hardware configuration) to the Microsoft activation system during activation. Activation is completed either directly over the Internet or through a telephone call to a customer service representative. Activations on the same PC using the same product key are unlimited.
http://www.microsoft.com/piracy/activation_faq.mspx Product Activation works by validating that the software’s product key, required as part of product installation, has not been used on more PCs than is allowed by the software’s end user license agreement (EULA). In general, Windows XP can be installed on one PC and Office 2003 or Office XP can be installed on one PC and the laptop computer used by the user of the one PC.
