This has been somewhat badly reported.

While I'm not a fan of product activation systems generally, this isn't some huge onerous new requirement. All this involves is a single extra step during downloading Windows components, where an ActiveX control is loaded in the browser (which presumably means you need to be using IE) which checks that your copy of Windows is correctly activated.

It doesn't involve the user entering any new details and it doesn't apply to security updates.

Thankfully the validation happens during download rather than during install. If they move the validation to the install point in the future then that really will become a pain.