Indie-Resource.com

If a tool is web-based with a server-side component, then they could very easily enforce the license by not allowing you access to the tool or engine. There have been some non-web-based, downloadable engines that manually enforced the license (such as Realm Crafter, which checked with their servers over the Internet), but that is usually not the best plan because it ends up inconveniencing and hurting legit customers, and it is giving hackers and software pirates a challenge to overcome (and they usually will).

However, most development tools don't work that way. Most simply give you the full engine, tool, etc., and then it is basically on the honor system if the license is valid and you are following the terms. This is the way ImpactJS works, for example. Obviously, the risks if you ignore the license are very real, and it often times isn't that hard for an engine/tool vendor to tell if you used their product. Most game developers are making a game so they can release it to the general public and have it seen by as many people as possible, after all. Then they simply check if you are a license holder and send you some nasty legal letters if you aren't. Serious damage to the product owner could even result in massive lawsuits.

Is there something specifically you wanted to know more about? All I could really give so far was just generalities.

There are literally thousands of different ways it could be done. For something like a web application, unless you were able to compile the code into a DLL or something like that, anything you put in to protect it could easily be removed by the user. The best way the company could protect its product would simply be through the fact that the user's project would be publicly accessible on the Internet, and infractions could be found quite easily with some creative web searches.

Ahh, I am not familiar with Ioncube, but I am assuming it is some kind of PHP source compiler. Then yes, it is probably either reading a license file if it is on the production server, or connecting to a license server if it is not, and prints the watermark and disables features if it is not licensed.

A "production server" is just the server that your application runs on when it is publicly accessible. If you have a web host, that is your production server. A "license server" is a server that accepts connections from your software to test if the license is valid. For example, a large, coded string with the license (probably secured with SSL) is sent from the application to check to the license server. Once the license server gets that license string, it tests if it is valid (perhaps by checking in a database). Then it sends another coded string back to your application. The application then checks if this coded string is correct, and if it is, it unlocks the software. Oftentimes the coded string sent by the license server is generated from the coded string initially sent by the application to help prevent spoofing. If all the license server sent back was a string that said "unlock" a user could spoof that in a second to unlock the software illegally.

My personally, I feel it is not a good usage of development time. Most software for development does not use any kind of checks, and instead leaves their customers unencumbered from DRM and simply uses Google to find people using their software illegally. Sprinkle little unique bits and pieces in the code (this can be done through a script, such as making tiny changes in comments or variable names and then records those changes with the license holder), and then if it ends up on a file sharing site, you know exactly who leaked it.

However, if you are dead-set on having some kind of DRM, I would suggest using a commercial product for it. If people really want to pirate your software, they are going to break through almost anything you or I could make, but perhaps a large company focusing 100% on a purchasable solution could offer some protection.