I was refering to back when they introduced "Windows Genuine Advantage" and for a time blocked automatic updates on unactivated machines.
Yes, I remember that too. Why should you be able to consume Microsoft's update services without paying for them in the form of an activation?
Most consumers obtain Windows via an OEM, Microsoft gets very little money for Windows itself and it's the OEM who is responsible for providing support to the end user. These days, windows is activated via an OEM key stored in the BIOS, so the above point is moot because the device is activated at the factory.
Some consumers purchase the retail version of Windows - generally because they want to deploy it to their own hardware, move the license between hardware or get support directly from Microsoft. Again, I don't see why you wouldn't activate Windows as you wouldn't get any support from Microsoft without doing so.
Other consumers know that you can activate Windows 10 and 11 using a valid license key from Windows 7 onwards. The Windows 7 key from my Technet subscription (cancelled in 2014 when MS killed the program) still works fine.