The activation code includes the following hardware details (at least):
volume serial number of system volume
network adapter MAC address
CD-ROM drive hardware identification string
CPU serial number
harddrive hardware identification string
SCSI host adapter hardware identification string
IDE controller hardware identification string
CPU model
RAM size
A bit that states whether the system is dockable or not (a laptop)
Naturally, if you don't have some of these things, they won't be included, but they might be added to it if you upgrade, I'm not sure. XP creates a code using these values (in addition to some other things), and when you change your hardware, it compares the value to the one used at the time of activation. If more than three of these ten bitfields are changed, re-activation is required.