Traditionally when a copy of windows is installed you have to insert your license key and activate by verifying it with Microsoft via internet or by getting a confirmation ID over the telephone. 
But with OEMs like Dell, Sony, Lenovo etc. a need was felt to get Windows activated right upon installation without going through all the annoyance.
With Windows XP a method called System-Locked Pre-installation (SLP) was devised.
Windows XP uses SLP 1.0.
Operating systems that use SLP 1.0 check for a particular text-string in a computer's BIOS upon booting. I could be mistaken but I believe it was simply the name of the OEM. If the text string does not match the information stored in the particular installation's OEM BIOS files, the system prompts the user to activate their copy as normal.
•	SLP has to do with the type of key that is used. 
•	They use SLP keys on their systems so that they do not have to put a unique key on each system as they make them.
SLP 1.0 was cracked quite easily which demanded for a more complex system to be developed resulting in SLP 2.0 included with Windows Vista, and SLP 2.1 shipped with Windows 7. Both methods works similarly with only a change in marker in Windows 7 based PCs.
An SLP 2.1 involves checking the presence of the below listed before it can activate. This means to activate Windows 7 you must have:
•	 A matching OEM-supplied SLP key.
•	 An OEM-specific certificate file file (widely available as ".xrm-ms" files)
•	An OEM-specific ACPI_SLIC table (SLIC 2.1 table)
SLIC
An SLIC (SYSTEM LICENSED INTERNAL CODE) Table is added to the BIOS on OEM PCs that come pre-installed with Windows 7.
As mentioned previously, SLIC is used in concert with a Matching OEM SLP Key and OEM Certificate file to Activate Win 7. 
"OEM-key and OEM-specific certificates were being cracked very early when a copy was leaked illegally from Lenovo, but the real hack was to emulate the SLIC table."

Provide SLP with a BIOS that has an v2.1 SLP/SLIC table 

What if my BIOS does not have SLIC 2.1?

First try updating your BIOS.
Alternatively, methods were developed to emulate commonly known as Loaders (also called the softmod). After you have installed a loader, now whenever your PC boots up, the SLIC data (SLIC Table) is loaded into memory, so when Windows 7 proceeds to load after it, it is tricked into "thinking" that your BIOS has SLIC 2.1. 
These loaders involves Linux based loader and sometimes may install trojans or other malware on your PC. (compromising System Security)
Other method called the hardmod also exist which modifies the BIOS and may lead to complete system damage. (compromising the system itself)