At TechEd North America 2010, Microsoft confirmed Windows Phone 7 developers will be able to register a number of devices which unlocks the capability to side-load apps on to devices directly from development tools such Visual Studio or Expression Blend. Initially, Microsoft will offer three device registrations per Marketplace account ($99 per year) tied a Windows Live ID. Developers who legitimately require more will be considered by Microsoft on a case-by-case basis.
The registration process which occurs on a PC with phone connected involves a small app which asks for Live account developer wishes to register the device on. The process simply flags that device in cloud backend and doesn't change phone ROM in any way. Once completed, developers can view through Marketplace website which contains a listing of all their registered devices as well as removing the device registration.