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Most iLok plugins allow you to directly put the license on your machine, so you don’t need a physical iLok or an internet connection to use it. You have the choice to use an iLok, iLok cloud (which requires an internet connection), machine authorization and even network authorizations. iLok is a much more mature copy protection model than what it was with generation 1 iLok’s.
As a software developer, I use iLok because there is a requirement for copy protection. Unfortunately the majority of people won’t pay for a product if given a choice. iLok provide a pretty good product which means I don’t need to develop my own encryption methods and run my own challenge and response server to manage activations.
If you lose an iLok or your computer dies and you can’t recover your licenses, you can contact your software developers who can cancel your old license and issue a new one. It’s fairly easy for developers to do this. If uptime is critical, you can use Zero Down Time. Overall it is a very flexible copy protections scheme, and while I’d prefer to not need one, this to me is the best of the options, given that something is required.