The difference is that OEM copies are tied to the PC (motherboard) they are sold with/first installed on. That is why they are cheaper.
That is one reason but not the main reason they are cheaper. Inextricably tied to the original motherboard means they cannot "legally" be installed on or transferred to an upgraded motherboard or new computer - only full "retail licenses can legally be transferred. I note too, a new motherboard constitutes a new computer so unless replacing the original motherboard with an identical board as part of a repair action, you cannot legally use the same OEM license when upgrading the motherboard in a computer.
Note we own the license, not the software. And we agree to abide by the terms of the license when we decide to continue using the software shortly after first boot. That makes it a legally binding contract.
Another lessor reason OEM licenses are less expensive is they typically don't come in fancy packaging.
To the point, it should be noted that OEM licenses are also referred to as "OEM/
System Builder" licenses. The system builder might be Dell, HP, a local shop or the individual/self builder. As part of the OEM/System Builder license agreement with Microsoft, the system builder assumes technical support responsibility (warranty support) for the 1 year warranty period, alleviating Microsoft of that burden/requirement. And THAT is the main reason they are cheaper.
It can be phone activated. Iv done it many many times.
Recently? I too have done it many times, but not recently with W7. Just wondering with support ending back in 2020 if MS would still activate it. I would think technically, they would not have to. But if their databases don't show it already installed, I think it would be an unwise move (PR nightmare) if they refused.