Windows Server 2003 Terminal Server Licensing notes
In Windows Server 2003 Terminal Server a client access license is issued to every type of client that will access it. Basically it includes Windows Server 2003 client connections Windows XP, Thin clients etc.
There is now two types of licenses: Per User and Per Device. Built-in ones still exist so that Windows Server 2003 Terminal Server Licensing Server supports Windows 2000 Terminal Servers and can issue licenses to them.
Basically if you selected this mode, it means that in Terminal Server Configuration console the Terminal Sever must be able to discover an activated terminal server license server. As long as its doable, users will never be denied a connection to the terminal server based on licensing and the number of available licenses will not drop.
If you selected this mode, it means that if a computer connects to the terminal server, it gets a temporary license. If it connects again, then gets a permanent license. This license only last for 90 days. At some point before it expires license will be renewed. Now if the client doesn’t connect back before the license expires, it will be returned to the pool of licenses and will be available again.
These type of licenses only exist for backward compatibility for Windows 2000 Terminal Servers.