Non technically - it is like an "on" switch for certain software. As the programs "boots" (or starts up), the program looks to see if the dongle is plugged in. Some programs require it to be in the exact same USB place others are more forgiving. The program will not completely start with out it being in place. This eliminates the possibility for one person to purchase a piece of software and share it with friends.
One big causation, if you actually loose that dongle (such as in 5D), you may end up re-purchasing the complete program. Many developers will repair or replace a broken or non operating dongle but none that I know of will replace a lost dongle.