Windows key code

I know how to install Windows with a genuine Windows CD, where the installation procedure asks for the 25-character key code and you have to type it in.
How does it work nowadays? I had to reinstall vista from the recovery discs and it never asked for the key code. I'd wiped the drive entirely. How does the laptop know the original key code, and how does it communicate that to the reinstalled OS?
I'm not interested in becoming a pirate. It bugs me when something so important is kept hidden from owner.

 

When you restore your system a drive image is loaded onto the HDD. Since the image is made after activation you don't have to do it.

Some VLK (Volume Licence Key) versions don't need activation too. Those Windows and Office versions can be installed and don't need a code often. These are also used by computer companies to put Windows on every machine they make.

 

it asked me when i reformatted. i remember having to flip the bloody thing over several times to read the key on the bottom

 

I had to do the same thing when I was registering the thing at Acer Warranty site. They don't exactly make it easy on you either - I couldn't tell the "oh"s from the "zero"s and had to try several times before Acer accepted it.

I have the serial # written down now in several places with the characters clearly designated

Punisher, the first thing I did before even going online and activating was make the recovery DVD's.