Hi,
Installing Windows without a license is not illegal, activating it through other means without an officially purchased product key is illegal.
When it comes to functionality, you won’t be able to personalize the desktop background, window title bar, taskbar, and Start color, change the theme, customize Start, taskbar, and lock screen etc.. when not activating Windows.
Additionally, you might periodically get messages asking to activate your copy of Windows.
KMS (Key Management Service)
KMS is one of the legal methods to activate Microsoft Windows and Microsoft Office. Activation ensures that the software is obtained from and licensed by Microsoft. KMS is used by volume license customers, usually medium to large businesses, schools, and non-profits. Individual computers do not need to contact Microsoft, although the KMS server does. KMS clients must be activated at least once every 180 days. A KMS client will try to activate once every 7 days, and if it fails it will try again every 2 hours.
Source:
Wikipedia
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Best regards,
Leon