midn said:
This implies any "licenses" file I distribute along with the actual executable also is part of "the Software", correct?

I don't think legal files are included in that definition (the license was not defining itself as being included in “the Software”). But IANAL.

Usually it's interpreted as “The software” being the source code. So if you're using MIT-licensed source code in your project, you should keep their original license file next to those code files in your source code repository.

If you want to be super paranoid and safe, then embed their license file within your binary distributions as well (hidden/embedded inside the executable, as a file in the root directory, as a file in a copyright subdirectory, etc…)…

If you want to be polite, add an “open source” section to your credits screen and list all the projects you're using and licenses there too. This isn't necessary - it's just a nice thing to do :D