A volume license allows a single product key to activate multiple instances of the same product (the same version of an operating system, for example). Microsoft has developed the Key Management Service (KMS) as a means to simplify activation of volume-licensed products. Using KMS, a server is deployed internally and keeps track of the activation status of volume-licensed products within the environment. Machines on the network use this internal server for activation instead of contacting Microsoft.
A KMS host is a machine operating as a KMS server. One or more KMS hosts can control activation for other machines in the environment. A machine which activates using a KMS host is known as a KMS client, regardless of whether it runs a client or server operating system (OS).
It common use in Universities, provide free Windows and Office to students etc. Its Free service run by University, students pay fee to study.
Run KMS service, need approve by Microsoft, so of course it is legal.
Here Guang need to pay for servers, so if you have spare money, as little as $1, donation is welcome.