Each developer account can register 100 devices. People would sign up for a developer account, then go on eBay etc and sell "get iOS 7 beta for $10!", register the customer's UDID on their dev account, and send them a copy of the ipfw.
It was possible to install the betas on non developer iphones by using the upgrade button in itunes (it doesn't require activation). Also, the GM doesn't require activation.