Service is a background process in Android, not to be confused with *nix daemons or Windows services
Services are inherently structured in a way that it runs in the background, without draining resources. A well designed service should only issue a resource to an activity or application and then shut off once the activity/application has satisfied its requirements from the service.
A *nix daemon/Windows service, are completely different in that, they poll and use up a lot of CPU time, which is prohibitly expensive on a Android handset.
An example of such a service, is,
GTalk to check if there's any new emails via GMail application (which communicates via that service) and consumes as little power and resource as possible, within a reasonable time limit.