Why do I need to activate my iPhone? This is something I don't particularly understand. I get that for Windows, activation exists to prevent software piracy, but you don't have to pay for iOS. Perhaps activation exists to prevent Android devices from using iOS or to prevent jailbreaks and downgrades? Anyone know the real reason why?
Activation in the sense of iPhone, or any cellular phone, for that matter, is registering and provisioning that phone for use with your cellular carrier. (Or more specifically for GSM networks, provisioning the SIM card.) It is unrelated to the type of activation found in Windows and other software.

It basically registers your phone with the carrier and obtains your specific settings (phone number, etc).