This activation is stored on an iLok 2 or 3 USB key.
It is the best option for portability, if you frequently move between multiple machines, and offline use. This activation is stored locally on your computer. While this is a convenient way to work offline, and does not require the additional cost of an iLok USB, there is the risk of a license being lost in the case of a drive failure. This option also requires extra care when you upgrade to a new computer, the license(s) must be deactivated on your old machine first to ensure you do not lose them.