WATU stands for Windows Activation Technologies Update. This was initially scheduled to roll out on Feb 16, and then later now on Feb 23 this becomes an optional important update. What does “Optional Important” update mean ?

It means this will show up in your Windows Update as an Important category, however by default this will not be checked. Basically its an update that user can choose to install or not to install. What this update will provide is

According to Zdnet

The new update uses signatures similar to those included with antivirus programs to identify exploits and automatically updates itself every 90 days. When it detects that the core licensing files used in Windows have been tampered with or disabled, the update tries to repair those files (or, to put it another way, it disabled the activation hack)

So this optional important update will tell you if your Windows 7 is Genius or not, in another words, it will verify your system once again and in a more thoroughly manner.

Personally I don’t think its a good idea to roll out such updates as an “optional important” if Microsoft’s goal is to eliminate piracy copies of Windows 7. Then why don’t they roll out as a must, if users “hackers” know this update will potentially make their Windows 7 none-Genius why would anybody go ahead and update this. And besides don’t forget they will “monitor” you every 90 days.

Really, its all depend on your choice, but for customers out there has yet bought a Windows 7. This is a great way to identify that you have a legit copy of Windows 7. 

Further reading:

Windows Activation Technologies in Windows 7