The significance of software licensing lies in its role in defining the legal and usage terms for software products. It outlines the rights and limitations imposed on both the user and the developer. Licensing can prevent unauthorized copying, distribution, or modification of software, protecting the intellectual property of developers. Furthermore, it can dictate whether software is open-source, allowing collaboration and modifications, or proprietary, restricting access to the source code. Software licensing is essential for compliance, revenue generation for developers, and ensuring users understand their rights and responsibilities regarding software use.