Difference between counterfeit and genuine Operating System?

Recently I bought a genuine window 7 and install it on my laptop but before that i use counterfeit windows 7. So far my counterfeit product seem to work well, no technical issues encounter. Some people prefer to use the fake one rather than the Genuine for some reasons, one of this is the cost of buying a genuine Os. Fake one can be downloaded and can be use to manipulate the software and activate it without paying. All the feature are similar, and I think fake one can also update windows.
I'm just wondering what is the advantage of using a Genuine OS. Does using counterfeit product may harm your hardware or any installed software?
What are the risk the may encounter from installing a counterfeit OS?
Is it against the law?.
Please people, can you elaborate more about the difference between the two.
