I’m not sure exactly how it works. I haven’t used it in a while now. It has several different options to activate, including hardware id or setting up a local KMS server. I only ever had to use it one time, per windows install, and it would keep windows activated. It also has a tool to switch windows versions, i.e. home to pro. It is fully open source and their wiki goes into more detail. https://massgrave.dev/
I run Linux with wine and if I make a Windows VM I’ll still use MAS and other tools to strip out Microsofts bloatwear. If you don’t like OneDrive so much then why even bother paying Microsoft for the trash heap that is Windows? There’s more than just OneDrive stealing your data.
If Microsoft really cared they’d pull a Nintendo and have GitHub nuke their repo.