NOTE: I have updated this post to include the most recent information as of 8/8/15.
There has been a lot of misinformation, poorly communicated information, interpretation of information, re-interpretation of information, reading between the lines, reporting of said "reading between the lines" as if it were fact, and just plain confusion about the Windows 10 upgrade, and the various circumstances that people have concerns about.
I will attempt to explain the situation, as it is understood right now. It will be impossible for me (or Microsoft) to answer everyones questions because everyone will have some condition they want clarification on, and there simply isn't enough bits in the universe to address every possible permutation of every possible question. So, if your question isn't answered here, you can try asking for more clarification, but please do not ask questions that are already answered here.
This is a complex topic. It should seem simple, but it's not. There are many people with many questions. I know this is a lot of information to digest, and a very long message. You will probably be confused even more if you try to absorb this as a whole. You need to think about each question individually.
This post will likely be updated as more information/clarifications occur.
Who qualifies for the free upgrade?
* Only non-enterprise users with a valid Retail or OEM and Genuine x86/x64 Windows 7, or Windows 8/8.1 Starter/Home/Standard/Core/Pro/Ultimate (whatever you want to call it) license qualify for a free upgrade. This is very simple, end of story.
* UPDATE If you have a non-enterprise version of Windows, that is joined to a Windows domain, you will not be offered the Free Upgrade automatically. If you want to get the free upgrade to your non-enterprise qualifying OS, then you have two options, either unjoin from the domain and then wait for the automatic upgrade to kick in, or you can use the Windows Media Creation Tool to upgrade manually.
* If you have an Enterprise edition, you do not qualify. If you have Windows RT from an ARM Based tablet, you do not qualify. We don't yet know about more exotic versions that most people have probably never heard of. Any version of Windows 7 or 8/8.1 that is efectively a Retail or OEM will qualify (ie, MSDN or Technet licenses, etc... even if you are no longer in those programs, so long as the license is valid).
* In addition, Windows Phone 8 and 8.1 users also qualify for the upgrade, assuming your Phone allows this upgrade (I don't know if some phones are locked or not to prevent this). However, Windows Phone 10 has not yet been released.
See this chart:
Also see this post (note that it does not count Enterprise editions):
Find Out If You Get a Free Upgrade to Windows 10 with This Flowchart
Do I have to "reserve" my copy to get a free upgrade?
No. You can upgrade without reserving. Reserving is only used to enable the process that automatically upgrades your copy via Windows update. You can still use an ISO to perform the free upgrade. You can use the Windows Media Creation Tool to either manually upgrade, or create ISO/USB media.
Please be VERY careful when using the MCT. If you do not choose the edition (see chart above) that corresponds with your upgrade, you will not be able to activate once installed.
See the following chart for details on which versions require an ISO, and which can be done automatically.
Do Windows Insiders get a free license?
* This is a simple question, with a complicated answer. The short answer is No. Neither do Windows 7 or 8/8.1 users. They get a free *UPGRADE*, which is not the same thing as a free license. The *UPGRADE* upgrades an existing valid Retail or OEM Windows 7/8/8.1 license to entitle you to use Windows 10. Just like any other single license, you can only install one copy on one machine at in given time. That one copy can be Windows 7/8/8.1 or Windows 10, but not both at the same time, and not both on different computers. (See section on dual booting and virtual machines).
* The longer answer is "sort of, but not really". If you stay in the Windows Insider program, you will continue to receive what are, for all intents and purposes, "Trial" versions of Windows 10, which expire after a period of time. These builds are Beta and Test versions, so may continue to have problems because they are not "Production level" code. New builds will be released periodically, and you must continue to upgrade to these new "Trial" builds in order to retain a working copy of Windows 10. New builds will be released before the expiration of the old builds. There is no information on how often these builds will occur, but some hints have been that they may come as often as a monthly basis. Perhaps even more frequent on occaion.
The primary difference here is that if you leave the Windows Insider program, you will no longer have a valid license to use Windows 10, so you must acquire one if you want to stay on Windows 10. You can acquire a free valid license either by upgrading an existing qualifying version as specified above within 1 year of the release date of Windows 10 (July 29th), or by purchasing a license for Windows 10 (or through MSDN/Technet or other standard ways). Either way, to stay on Windows 10 you must have a valid license, since one is not given to you simply by participating in the Windows Insider program.
What if I want to stay an Insider, but still take advantage of the Free Upgrade for a valid license I retain?
* If you originally upgraded your Windows 10 Preview from a genuine copy of Windows 7/8.x then when you upgrade to the final RTM, you will be considered to have a genuine Windows 10. You can leave the program at any time after that and still have a legitimate license, even if it's 2 years later. The key is that you upgraded a legitimate version, and did not just install the Insider clean originally. If you installed the insider preview clean originally, then you will need to restore a copy of Windows 7/8.x and perform at least one upgrade to have a legitimate license. You can do that and stay in the insider program.
Can I "go back" to a previous version of Windows?
* UPDATE As of the license terms released with build 10240, Windows Pro allows full "downgrade" rights, so you can go back to Windows 7 or 8.x for as long as MS supports those release. You can also go back to Windows 10 at any time. Windows 10 Home does not have downgrade rights, but since you have the original license, you would simply be re-installing your original license, not the upgraded license. I am not a lawyer, however, so this is just my interpretation.
Do I have to "forfeit" or "give up" or "lose" my existing Windows 7/8/8.1 License/Key to upgrade to Windows 10?
* No, you do not have to forfeit, give up, or lose your existing Windows 7/8/8.1 License/Key. Your license is still your license, and the upgrade only adds additional rights to run Windows 10. Microsoft will not revoke or disable your original Windows key (in fact, if they did that, you wouldn't be able to transfer the license to another computer, because you need to have an activated 7/8.x before you can upgrade on a new PC).
There is much confusion over some of the terminology used to describe this process. For example, in some cases, it's been said that your Windows 7/8/8.1 license is "consumed" by the Windows 10 upgrade. While this is in fact true, it only means that you are not getting a seperate additional license to run Windows 10. Your existing license is "upgraded" to give you the right to run Windows 10. You still have a right to run Windows, whether it be Windows 10 or your original Windows.
This does *NOT* mean that you can no longer use Windows 7/8.1. It means you cannot use both Windows 7/8/8.1 and Windows 10 at the same time. It's a single license for *ONE* instance of Windows.
Does my Retail copy of Windows become an OEM copy (Locked to the hardware it was upgraded on) after the upgrade?
* UPDATE As of the license terms released with build 10240, an original OEM copy upgrades to what is, in effect, still an OEM copy. An original Retail copy upgrades to what is, in effect a retail, transferable copy. Microsoft has done away with terms like "OEM" in the license, and now use terms like "If you originally acquired the software preinstalled on the device" and "If you acquired the software from a retailer". And, in the license they explicitly say that an upgraded retail license is still a transferable retail license.
In no situation does your original Windows 7/8/8.1 license get converted to an OEM license.
To clarify, in order to transfer your copy of Windows 10 to a new PC, assuming you have a retail license of Windows 7/8.x, you must first install Windows 7/8.x on the new PC, then perform a new upgrade on that PC. If this happens after the 1 year upgrade period is over, the Activation servers will know that your old license has already been upgraded and re-activate the new upgrade.
Can I dual boot my Windows 7/8/8.1 and Windows 10?
* There are two questions here really. Is it technically possible? And is it legal to do so? Legally, most likely not, unless you have two seperate license. Techncially, you probably can.
Will my Windows 7/8/8.1 key be invalidated after I upgrade to Windows 10?
* No, your previous Windows 7/8/8.1 key will not be invalidated.
In fact, if they were to do so, it would mean you could no longer transfer your copy to a new computer, because as I outlined above, you must first install an activated Windows 7/8.x on the new computer and then upgrade it before you can activate Windows 10 on a new computer.
That does not mean you are legally allowed to run it simultaneously with Windows 10 on a different computer, sell the old copy of Windows with key, or dual-boot it and the upgraded Windows 10 instance.
How does Microsoft know that a clean install is a validly upgraded Windows?
* There are not many specifics from Microsoft on how their system will know this. However, it appears that when you performan an upgrade, then various hardware hashes get sent to Microsoft, along with the old license key. So when you do a clean install, after you have performed the upgrade, the Windows Activation servers know that you are on the same hardware, and simply activate.
Conversely, this also means that in order to transfer a copy to a new computer, you must first install Windows 7/8x. to the new computer and then perform a new upgrade. This enables the activation servers to know about the new computers hardware hashes and allow it to activate.
Will I get new Windows 10 keys to replace my old keys?
* Yes and no. When you upgrade an previous version of Windows, Microsoft does not explicitly give you a new key. All future installs are keyless. However, you may read about a "generic key", which replaces your old key in the upgraded Windows 10. This key is essentially useless for most people, and cannot be used to activate a new copy of Windows 10 (or even a reinstall, activation happens automatically). In most cases, if you try to use the key when installing a copy of WIndows 10, it will not be accepted. Its only valid use is when booting from a CD or USB, and installing a clean copy with this temporary key. This will, however, result in an unactivated copy of Windows 10, even if you've already successfully activated it (you will most likely get the Key Blocked error).
Did Microsoft "Lie" about giving pirates or people with XP/Vista/etc.. free copies?
* No. At worst, they miscommunicated a lot of information, or poorly communicted information without context. So while the information they released was valid in a specific context (for example, applying to the Windows Insiders group), it did not apply to others. Unfortunately, all too many people jumped to conclusions (even well known journalists who should know better).
There was one time Microsoft implied that pirated copies of Windows would become valid Windows 10 after upgrades. This occured during a presentation at a conference, and the information was either wrong, or again not communicated with context. Microsoft clarified the next day that this was not the case, but all too many people reposted, retweeted, etc.. the first information and it became a common myth.
Microsoft has always known exactly how they wanted this process to work, and they have not changed their minds about it. However, they have not been very good about communicating the full strategy completely and in proper context.
As you can see by how long this post is, it's not easy to communciate this information succinctly and simply. As such, every time someone asks a question like "Will windowsy stay activated after an upgrade?", unless they were to write a response as long (if not longer) than this, people will interpret the results differently.
Is the free upgrade a trick? Do I have to buy a new copy in a year? How does Microsoft make any money if they're giving it away?
* No, it's not a trick. You do not have to buy a new copy in a year if you have upgraded. The upgrade is permanennt. A better way to say this is "The free upgrade offer is only valid for one year". The key word there is "Offer". The offer is time limited, not the license you receive through the offer.
As far as making money, one has to understand that this free upgrade only applies to consumers who have a retail or OEM Windows 7/8/8.1. It does not apply to corporations, so all corporations have to pay for the upgrade if they want it. It does not apply to OEM's who still have to pay for the copy of Windows that goes on a new PC. It does not apply to users of Windows XP, Vista, or pirates. Those people, if they want a valid license, will have to acquire one.
Microsoft makes a lot of money from other sources. Server operating systems. Server applications (Database servers, file servers, web servers, etc..), Web Services (Azure, etc..), as well as applciations like Office, Visual Studio, etc... Microsoft is in no danger of taking any real financial loss from this free giveaway, and there are no tricks to force you to pay. There is also revenue they will generate *IF* you choose to purcahse an application from their Store, but you are not required to purchase any of those apps, and many are free.
Can I re-install Windows 10 from scatch (clean install) without first installing the older version? Can I do this after the 1 year period?
* Yes and no. You *MUST* perform an upgrade install on any given PC you install it to (assuming you don't have a real Windows 10 key) the first time. After the first time, and you have a fully activated and genuine Windows 7/8.x, you can re-install as many times as you like clean (without first installing the old version). If you transfer to a new computer, you will once again have to install the older OS and perform the first upgrade.
(To be continued....)
Frequently Asked Questions Windows 10 - Microsoft Community
Windows 10 FAQ Tips - Microsoft