Learn all about Find My iPhone Activation Lock

Find My iPhone includes a feature called Activation Lock that is designed to prevent anyone else from using your iPhone, iPad, or iPod touch if it's ever lost or stolen. Activation Lock is enabled automatically when you turn on Find My iPhone on a device using iOS 7 or later

With Find My iPhone Activation Lock, your Apple ID and password will be required before anyone can

• Turn off Find My iPhone on your device
• Erase your device
• Reactivate and use your device

This can help you keep your device secure, even if it's in the wrong hands, and can improve your chances of recovering it. Even if you erase your device remotely, Activation Lock can continue to deter anyone from reactivating your device without your permission. All you need to do is keep Find My iPhone turned on, and remember your Apple ID and password.
Here are answers to frequently asked questions about Find My iPhone Activation Lock.

 How does Activation Lock work?
When you enable Find My iPhone on your iPhone, iPad, or iPod touch, your Apple ID is securely stored on Apple’s activation servers and linked to your device. From that point on, your password will be required before anyone can turn off Find My iPhone on your device, erase your device, or reactivate and use your device.
Activation Lock is enabled automatically when you use Find My iPhone on a device using iOS 7 or later.
To turn on Find My iPhone on your device:

1. Tap Settings.
2. Tap iCloud.
3. Sign in with your Apple ID, if necessary.
4. Turn on Find My iPhone

What steps should I take if I misplace my device?

If you ever misplace your device—whether it’s just lost or you think it may have been stolen—you should put it into Lost Mode immediately using Find My iPhone.
Lost Mode locks your screen with a four-digit passcode and lets you display a custom message with your phone number to help you get it back. You can also remotely erase your device if needed, and your custom message will continue to display even after the device is erased.
While Activation Lock works in the background to make it more difficult for someone to use or sell your missing device, Lost Mode clearly indicates to anyone who finds your device that it still belongs to you and can’t be reactivated without your password.
To put a device into Lost Mode, sign in to icloud.com/find from a Mac or PC or use the Find My iPhone iOS app.
For more information, read what to do if your device is lost or stolen. 
 

Do I need to turn off Find My iPhone before giving away my device?

Yes. Before giving your device to someone else, always turn off Find My iPhone to ensure that the other person will be able to activate and use the device normally. The best way to do this is to erase all content and settings from your device before handing it over. This will completely erase your device, turn off Find My iPhone, and remove the device from your iCloud account. On your iOS device, go to Settings > General > Reset > Erase All Content and Settings.
For more information, read what to do before selling or giving away your device.

Do I need to turn off Find My iPhone before having my device serviced?

Yes. If Find My iPhone isn't turned off, technicians may not be able to perform service on your device

What if I forget my Apple ID password?

If you forget your password, you can reset it at My Apple ID (appleid.apple.com) or by contacting Apple Support and verifying your identity.
If you forget your password and cannot reset it, you will lose access to your Apple ID and may be unable to use or reactivate your device. To help prevent this, visit My Apple ID periodically to review and update your account information.

What if I purchase a device that is still linked to the previous owner's account?

Contact the previous owner as soon as possible and ask them to erase the device and remove it from their account. Learn how to remove a device from a previous owner's account.

How do I check for Activation Lock before purchasing a used device?

When purchasing an iPhone, iPad, or iPod touch from someone other than Apple or an authorized Apple reseller, it is up to you to ensure that the device has been erased and is no longer linked to the previous owner’s account.
You can check the current Activation Lock status of a device by visiting icloud.com/activationlock from any Mac or PC.
Or you can follow the steps below to make sure that you can use the device you purchase

1. Turn the device on and slide to unlock.
2. If the passcode lock screen or the Home screen appears, the device hasn't been erased. Ask the seller to completely erase the device by going to Settings > General > Reset > Erase All Content and Settings. Don't take ownership of any used iPhone, iPad, or iPod touch until it's been erased.
3. Begin the device setup process.
4. After choosing a language, choosing a country, and connecting to a network, the device will begin activation. If you're asked for the previous owner’s Apple ID and password, the device is still linked to their account. Hand the device back to the seller and ask them to enter their password. If the previous owner isn't present, they can remove the device from their account by signing in to icloud.com/find. Don't take ownership of any used iPhone, iPad, or iPod touch until it has been removed from the previous owner’s account.

You will know that a device is ready for you to use when you're asked to “Set up your iPhone," “Set up your iPad," or “Set up your iPod” during the device setup process.

Does Find My Mac include Activation Lock?

Activation Lock works only with iPhone, iPad, or iPod touch devices using iOS 7 or later.

credit  http://support.apple.com/en-us/HT201365