It is a small text file formatted in XML that contains encrypted data verifying your purchase and linking the software to your user account. Without this file present in your LaunchBox folder, the software will revert to the free version.
The license.xml file is an encrypted document provided by upon purchase of a LaunchBox Premium license. Unlike many modern apps that use restrictive login-based DRM, LaunchBox uses this local file to verify your status. launchbox license.xml