It works by nuking the verifying sppcompai.dll from orbit, and even goes so
far as to decativate any reminder popups that might otherwise annoy, reminding
you indefinitely to activate your copy of Windows 7.
This is probably a short-lived hack, though. A similar activation hack came
out for Vista a couple of years ago, and Microsoft was able to patch it up
without much problems. According to My Digital Life, the reason the Windows 7
hack might work right now is “due to leniency… on the part of Microsoft on [the]
activation mechanism to avoid getting too many false-positives.”