You can reformat as many times as you like.
Vista will not require a system re-activation unless the hard drive and one other component is changed. This means that enthusiasts will be able to swap CPUs, memory and graphics cards out without any worry about having to re-activate with MS, either on the internet or by phone.
Should you change the hard drive and another piece of hardware - for example for a major upgrade such as a motherboard change that requires a re-installation - Microsoft will allow you to re-activate up to 10 times. You will not, however, be able to have more than one machine activated concurrently.