> In laymans terms- then what? 
> What IS challenge/response? 

You won't even notice it. It feels like a simple online registration, but
what's really happening is that your specific computer is registered and
activated using a most likely globally unique ID.

You will only notice it when trying to install it on the third or fourth
computer. Registration will then say: too many installations. After 30 days,
Finale will stop working on that machine.

Otherwise, you have nothing to fear. If you sell the machine and need
another installation, you can just talk to them and they will enable it. I
did that many times with Sibelius back when I gave it a chance.

Cheers,
Tobias

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