The term is a misnomer born from confusion and piracy. Legitimate KMS activation exists only for volume-licensed perpetual editions of Office (like Office LTSC), not for subscription-based Office 365 / Microsoft 365.
Every machine in the building would silently check in every 7 days, trying to renew its lease. If a laptop was stolen and taken offline, the license would survive for 180 days. But eventually, it would need to find the KMS host again. It was a security feature. If the company stopped paying, or if the machine left the network for six months, the license would evaporate. microsoft office 365 kms
For small businesses, Microsoft 365 Business Premium is $22/user/month. For nonprofits, it is often $3–$5/user/month. For enterprises, volume licensing includes KMS activation rights. The cost of a data breach from a fake KMS tool far exceeds the legitimate licensing cost. The term is a misnomer born from confusion and piracy