There has been an offer to upgrade 7 or 8/8.1 to 10 for free. This offer ended in 2023 I believe. Since its end you cannot activate a Windows 10 or 11 with a 7 or 8 product key anymore.
But if you used the offer while it was valid, you got a digital license.
A digital license is a record stored in the MS servers, got by anyone that activates a Windows 10 or 11 installation (either as new or through the upgrade offer). The digital license activates the same hw automatically, provided it's the same Windows variety (Home, Pro or any of the others).
Users with an upgrade license must use the generic product key as all they have is their hardware, a digital license for it, and a product key from W7 or 8 nor recognized anymore. Basically they have the right to use 10 or 11 (in the same hw) and the thing that accredits this right (the digital license), but not a 10/11 product key. The generic key fulfills this requisite if there's a valid digital license, that only can be got by a valid route (the main ones: an OEM license got with a computer -most frequently recorded in the BIOS so the user doesn't have to enter any product key-, a retail license and its product key entered physically by the user, and the upgrade offer from Windows 7 or 8).
I have a diffuse memory that any or some upgrade licenses or in some cases can be transferred to different hw with the Windows Activation Troubleshooter.