Basically its because the debug driver isnt installed. I swear this has happened to every Android phone I have tried to develop on. I don’t really understand (but assume there is a reason) why google doesn’t just bundle the drivers or tell you to look for them.
Anyway, assuming you have enabled debug mode on the Android, if you look at Device manager there would be an unrecognized device called Nexus, you need to manually install the driver from here:
http://support.asus.com/download.aspx?SLanguage=en&p=20&s=16&m=Nexus%207&os=32&hashedid=WzTziL1xapnpDNwF