In its simplest form a service is a program or process that performs a specific function to support other programs or provide specific independent system functionality. These range from device drivers through to interactive applications. A service (or more correctly – a service application) conforms to the interface rules of the Service Control Manager (SCM).
When you install Windows on any computer it will immediately be running multiple services. These services provide core operating system and tool functionality to the computer. In addition to these core services, you might also be running additional services created by other applications. There are a slew of Microsoft products, as well as other third party products, that install services on your computer. Examples include Exchange, SQL, SMS, various backup programs, and enterprise management applications.
Services are typically configured and managed via the Service Control Panel Applet (services.msc):
