This takes me back. I worked for a software company a long time ago that used these types of physical dongles and they would serve two purposes. One to prevent the software from running, and also to store data in one or more registers with more detailed license entitlements beyond just will it run. Like how many client connections are allowed, license expiry, etc. There was a switch to USB based dongles at some point and then software licenses often tied to physical attributes of the server that the software was running on.

Physical dongles remained popular with customers for longer than you would expect mostly in my often air gapped previous industry where the ability to rapidly deploy new hardware in the case of a failed server, transferring a dongle based license was a simple matter of plugging the existing dongle into the new server and you were up and running again. Many soft licenses required internet connectivity or required you to revoke the license from the old server and reassign on the new computer taking into account the new hardware identifiers for locking the license down to the specific server.

I can still hear them rattling about in my top work drawer as I opened and closed them.