Starting Office 2010, all volume editions of Office client software’ll require activation. Office has adopted the Windows Software Protection Platform (SPP), and the Volume Activation for Windows applies to Office as well. For example, the same Key Management Service (KMS) host can be configured to activate Office 2010 clients as well as Windows 7 and Windows Server 2008 R2.  Also, there’s no reduction in functionality in volume editions of Office 2010. Even if Office’s not activated, users’ll still be able to open, save, edit, and print Office files, though users’ll see notifications reminding them to activate. There’re two models available for activating volume editions of Office 2010 client. The default method is KMS, which’s a local activation service. A KMS host needs to be set up, and that’s the only computer that activates with Microsoft.  The other is Multiple Activation Key (MAK), which’s similar to the retail activation method: a key needs to be entered, and the computer’ll need to connect to Microsoft to activate.

Full Article: Office 2010 blog