I've been researching this and the sellers of this assert they are selling licenses that are left over and entirely legitimate. It's a secondary market, not unlike used cars or anything else that is more tangible. I think there might be precedent for this to be legal even if Microsoft wouldn't like it be so.
It's illegal. Software is licensed, not sold; and software licenses are usually nontransferable. This was a point of contention in Vernor v. Autodesk wherein the 9th Circuit found for Autodesk.
In the United States, you are right. In the EU, that is wrong. See for example: [0]
The reason you can get entirely legal windows licenses for so cheap is that there are many institutional buyers who get the licenses they actually use separately but still purchase a lot of computers that have OEM licenses bundled [1], and now they all unload those licenses at whatever price the market will bear. Last year, that was ~6€, this year it's down to ~3€.
The fact that the prices is now so low is probably a part of why it keeps going down. A lot of people in this thread express suprise that a legit key could be so cheap so they obviously must be illegal, which drives away sales.
