When you buy a game on Xbox.com (or even through the console), you’re shown some terms which, in typical Microsoft fashion, confuse the average person due to not being too straight or making a lot of sense.
Let’s take a look at the text and break it down to explain it in simpler terms.
The item you are buying is subject to usage restrictions. You can use this item on the first Xbox 360 console that you download it with. Access to this item will also be granted to all users on this first console. If you transfer the item using a memory unit or other storage device, you will also be able to use it on other Xbox 360 consoles, but you’ll need to sign in to Xbox LIVE with your Xbox LIVE account on that console before accessing the item.
1. You can use this item on the first Xbox 360 console that you download it with.
Well, obviously, because that’s the console you own and has your profile on.
BUT, the ‘DRM’ or License means it MUST be your console you download it to, otherwise the license belongs to the console you download it to.
2. Access to this item will also be granted to all users on this first console.
All profiles on an Xbox 360 can access any and every game installed on the HDD as long as the purchasers profile is also on that console.
Now for the confusing part…
3. If you transfer the item using a memory unit or other storage device, you will also be able to use it on other Xbox 360 consoles, but you’ll need to sign in to Xbox LIVE with your Xbox LIVE account on that console before accessing the item.
In other words, you can play the game on any other console IN THE WORLD, as long as you download your profile on to that console. (You would have to change the region of your account if you really did go to another part of the world)
It’s like, they’re telling you that you can only play the game on your console, but then say that you can play it on other consoles, leaving you scratching your head as to what they’re trying to say.
Every game you buy through YOUR Xbox profile is linked to YOUR Xbox account. That is why you can perform a License Transfer if and when you buy a new console, it would be pretty stupid to link all your purchases to a console.
tl;dr Xbox 360 games (downloadable (Games on Demand, Downloadable Content (DLC), Xbox Live Arcade, Xbox Indie Games and even other content such as video)) are linked to your Xbox.com account.
Microsoft like to embellish text to sound more complicated instead of using plain Englidh.