KMS stands for Key Management Service, a product activation technology used for installing and licensing Microsoft Windows in bulk. System administrators use KMS to activate computers connected to a local network simultaneously as opposed to connecting each computer to a Microsoft server manually.
KMS activation utilizes TCP/IP connectivity. Client computers search for a KMS host computer on the local network through DNS or static IP configuration to request activation. Once validated, client computers must contact a KMS host again in 180 days to renew their activations. KMS activation requires a certain number of computers on the local network to work, which is 25 for Windows 7. Physical computers and virtual machines count toward the activation threshold.