What does this code do exactly?

Hi Treysil,

What does this code do exactly? 

The code in both images does exactly what it says it does, the one on top clears information about last used key in Regedit and clears all saved favourites in Regedit. This has only to do with how you use Regedit and won't affect anything else. The second bottom one removes the Windows Product Key from the Registry.

What key is being referred to? 

The bottom script/code refers to Windows Product Key.

Does this have anything to do with the windows activation key or no? 

The Product key (License Key) is not the same as Activation Key.

In summary, a product key is used during installation, while an activation key is used to activate the software afterwards. Both are essential for ensuring a legitimate and functional software experience.
- Microsoft

Is it possible to restore a removed product key after running this code?

This I don't know.

Or do windows have to be reactivated?

This I don't know.