As far as I recall, the licence is for the lifetime of one motherboard.
They can make you do this, if you use their product.
Retail is tedious for them. They want to deal with PC manufacturers who buy a million licences at a time, or big corporations who buy into their rolling upgrades program - which annoyed a lot of people when no upgrades were rolled, so you were buying nothing. But they can make you do this.
They are addicted to money, I think. PC industry growth was sky-high for years and Microsoft revenue soared. There was never anything like it. But once everyone has a PC and a copy of Windows, what can you sell them? How do you keep the money addicts, the shareholders, happy? Well, you sell a new version of Windows, and you try to get more money from each customer every time.
In this they aren't different from other businesses. Everyone wants to get money from customers. But Microsoft has special ways to do it - lock in the customers so that to participate fully in society, to pay your taxes, to draw your salary, to access public media, you have to use Microsoft software.
Home software rental is coming, I'd say. There may even be PCs with coin slots.