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The main purpose of a killbit is to close security holes. If a vendor discovers that there is a security hole in a specific version of an ActiveX control, they can request that Microsoft put out a "killbit" for it. Killbit updates are typically deployed to Microsoft Windows operating systems via Windows Update.
A killbit is a flag in the Windows Registry that marks a GUID as being unsafe. The GUID acts as a serial number for the software in question - a unique GUID must exist for each potential piece of software that behaves as an ActiveX control. If Internet Explorer finds that the GUID of a killbit entry matches the GUID of the software, then the software cannot be run by Internet Explorer. If a vendor wants to release an updated version, they release it with a different GUID.
Microsoft Office also makes use of killbits to determine if an object embedded within a document may be loaded.