Dell (and other major OEM's) are entitled to use a special kind of activatio to 1) facilitate easy mass deployment on preinstalled systems, and 2) allow a user to reinstall Windows without the headache of activation (including situations where the COA is not longer legible, etc.).  This activation includes a generic Product Key, called a SLP (System Locked Preinstallation) key, and because it is generic for the purposes of OEM activation, it 1) will not work when used by itself, and 2) does not match the Product Key on the COA.  The COA is your actual rights to run/use the Windows software.  Occasionally, you may be asked to activate Windows (due to corruption, hardware replacement, non-matching installation media, etc.), in which case, the COA Product Key will work to activate Windows.  With Vista+, your COA Product Key can be used to activate an install performed from non-SLP (or "retail") media, although activation by phone is usually required.  Although it will usually install and activate, you are ONLY allowed to install Windows using SLP/OEM media on computers that have an accompanying and qualifying COA for that OS (or downgrade).
Why is it possible to install an OEM copy of Windows XP Home SP2 to multiple Dell computers and having them activated but unregistered? Each Dell computer has it's own product key sticker but apparently that key on the sticker doesn't match the key which is part of the Dell re-installation CD. I have this key finder utility which displayed the same product key pulled from the registry of each Dell computer. And that key is not the same as the key on computer's product key sticker.
Installing an OEM copy of WIndows XP Home SP2 to multiple "Dell" computers