Well, in the really old days this was it. You could "copy that floppy" and have your own pirate version of the software.
It was actually a bit more complicated. In many cases, the original install floppy served as your license 'token', and the software required it to be present in your floppy drive or the software wouldn't run. This was especially true for games.
Various tricks were used to make straightforward copying of the main install floppy ineffective. They usually involved nonstandard floppy disk formats, such as deliberate bad sectors, unusual data density, data outside the normal disk data range, etc. Many of these methods were used already for Commodore 64 games, and later adapted for Amiga, PC, etc., although serial number checks were sometimes used instead (esp. for business software), or even physical hardware 'dongles' that needed to be present while running the software.
But as is commonly known, the C64 years were also the golden age of binary hackers. They would invent a number of means to circumvent those devious copy protections. Low-level nibble copiers were widely circulated - mainly on floppy, and practically every C64 user had acquired one somewhere. Those copiers would make 'low-level' disk copies, ignoring the normal disk layout. Or you could 'dump' the memory image of a loaded game state where the copy protection check had already been passed. Of course real men would settle for nothing less than manually editing the game binary to work without a special disk.
Honestly, the last part was way above my meager skill but I occasionally had the privilege of watching a true artist at work. He would wade through pages and pages of hex dumps, immediately recognize the interesting calls, and then modify them...to disable copy protection, to give you infinite lives, to take you to the level/map of your choice, etc. Whatever you wanted in a game.
Needless to say, that guy went far.