Hack let you convert encrypted Mobipocket files that were intended for another reader so that that work on Kindle.
Plenty of free e-books in Mobipocket format show up fine on Kindle.
We've known for some time already that Amazon's AZW files are actually Mobi files, but Amazon didn't share Kindle's Mobi PID which would allow one to buy encrypted Mobi books for Kindle.
DRM refers to the fact that you can't view Amazon Kindle books on other devices (including your computer), or on other Kindles - i.e. no sharing, the purpose of DRM.
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