OEM is Original Equipment Manufacturer. You are correct that an OEM copy is used by system builders. However if you are buying hardware to build a PC yourself you can also buy an OEM copy legally, but it must be at the same time as the hardware is bought.
A Retail copy is one you buy off the shelf to install on a PC you own.
There is no other difference between OEM and Retail.
The number of PCs you can install to is determined by the license. This can be bought separately if you need it for more than One PC. For example an Office might buy 25 PC with 25 Licenses but only get two CDs (One Master and One Backup)
Usually a big System Builder like Dell will use one copy to make a Master Installation and then buy a license for say 50,000 machines. They keep buying licenses as they need more and clone the original PC on to the others.
A small shop might sell each PC with its own OEM copy of the OS.