As Rob Caron posted, there's a new Microsoft Visual Studio Team System Licensing white paper. Now, I'm not a lawyer, but I could follow what it's saying and think it's much clearer than the previous version (and even that one basically made sense to me). Here's a few tidbits based on the common questions I've seen on the forums:

  • Team System client products are licensed according to the Microsoft Developer Tools licensing model, which licenses products on a per user basis and each licensed user may install and use the software as many times as they wish on their devices. However, a license for each product is required for each user who uses it on those devices.
  • When you purchase a Team System client product, you also receive a CAL (Client Access License) for Team Foundation Server. You may purchase additional CALs for users who are not licensed users of these client products.
  • Team Foundation Server Workgroup Edition contains all of the same features as Team Foundation Server, but its use is limited to five (5) named user accounts... Team Foundation Server uses SQL Server 2005 as its data repository. A restricted-use version of SQL Server Standard Edition is included with Team Foundation Server, which is installed separately.
  • You do not need a Team Foundation Server CAL for:
    1. Any device running another licensed copy of the server software
    2. Up to two devices or users that only access the server software to administer it.
  • Hardware or software that reduces the number of devices or users that directly access the server software (sometimes referred to as “multiplexing” or “pooling”) does not reduce the number of CALs you need.

On that last point- generally the two devices/users are your service account and reporting service account. The former will have administrative TFS privileges by default (due to the nature of the operations it performs), while the latter basically gets read-only access.

Hope this helps! If you have any questions, I may not be the best person to answer but can certainly try to find out what you want to know.