As the software publisher, you create “shareable” licenses and deposit them to the iLok account of the local admin who will manage the iLok License Server (ILS) instance. The end user does not need their own iLok account.
The local admin activates the licenses to an iLok USB that is plugged into the ILS machine. Basing ILS on iLok USB means it works securely and reliably on air-gapped networks, even when there is no connection to the internet.
When the network-enabled iLok-protected software loads, it connects to the ILS instance and fetches the license for the “seat”. When no more seats are available under the license, no more instances of the software will be able to run. Licenses are automatically returned to the pool when the software is deemed inactive.
The local admin can choose to require a password before an end user can connect to the server. This means you can allow your server to be seen on your network, but still require that a user enter a password before they can use any licenses that you are sharing.