I mean is entering the product key not starting the activation? Are they two separate things?
They are 2 separate things, but most people activate the moment they enter the product key. That is, the grace period is meaningless for a majority of users. However, if there are errors (e.g. their internet is down) the grace period gives a customer N days to activate.
In short, the grace period is to give a little leeway for real life conditions.