In VMM 2012, a service is a set of VMs configured and deployed together and managed as a single entity. For example, it's like deploying a three-tier business application or a frontend web application with SQL Server running in the background.
A service template provides the capability to separate the OS configuration from the application installation, leaving you with fewer OS images.
Using service templates, you will be able to leverage variations in capacity, easily being able to add or remove VMs needed to support the application.
Tip
It is the best practice to wrap even a single VM template into a service template as you scale it out, for example.
Ensure that the resources that you need in order to create the service are available. Review and document all the elements that the service needs to be up and running before starting. For example, identify the following:
What servers need to be deployed to support the service
Which existing VM...