Yes, you can only use it on one computer. You will get an "official" authentic license with holographic seal with a license key on it. After installation you'll have a grace period of 30 days to activate Windows with Microsoft. If you try to use the same key on another machine you'll have to activate it also, which will cause problems. The activation process looks at your system - and if the system doesn't match the previous activation (as it would in a reinstall) then you'll be asked to call customer service.
Can you cheat the system though? Sort of. If you try to install on a different system every several months then you <span style="font-style: italic">might</span> get away with it. You might have to call for activation, but they might let it slide. Whether or not the updates or various add-ons that require a check of your operating system's authenticity will work is another question.
Why pay that much though? Right now Win-7 Home Premium OEM is $99. "Pro" OEM is $139 - from
Newegg. The "ultimate" version is more, but there's very little reason for most people to need the "ulrimate" version, and I'd guess most people really don't even need the "pro".
The non-OEM upgrade-versions (assuming you have a legal copy of XP or Vista you're upgrading from) are $200 for the PRO and $120 for the Home Premium.
OEM means you can install it on one machine and you're not supposed to be able to even remove it and install it elsewhere...but I've done it with XP, other folks on the 'net have a history of changing their hardware on a regular basis and haven't had much trouble but be forewarned of the license's intent. It also means you don't get official support from MS but with the amount of unofficial (and usually better) support online why bother. I've never called MS about anything, ever, so I'll take the lower-priced OEM version any day.