You are right, its not exactly the honor system. In fact, its probably MS trickery. When you upgrade your motherboard (with an OEM OS), you have to buy a new OS. However, if your motherboard dies and you have to replace it, you call them up and tell them, and they will validate it. I guess the strategy is that the computer will not be validated through the net and that people will automatically go out and buy a new OS because they don't know that they can call and get it validated over the phone.
Or perhaps I am being too pessimistic