How is Win10 activated?

According to Microsoft's policy, all Windows Insiders test users and genuine Windows 7/8.1 users can upgrade freely after the official release of Windows 10. Prior to this, Microsoft has made it clear that as long as the user equipment has been installed with Win10, it will be unimpeded whenever it is installed again.
Therefore, the problem is, in the case of completely reinstalling the system, how does Windows 10 determine whether the user's device meets the "free upgrade" condition?
Gabriel Aul, the person in charge of Windows Insiders, explains this. Windows 10 has an "Activation Service" that detects whether the user's original device contains genuine license information for Windows 7/8.1. Once detected, Windows 10 will be automatically installed and activated without user intervention. You do not need to enter the previous Windows 7/8.1 activation code again.