Essentially Services are "abilities" that varous programs or utilities can offer to any open application.
The ones you're seeing are the ones you get from a "stock" installation--the ones offered by Text Edit, Disk Utility. and so on.
An example of one I use frequently is a small application for doing fancy Unicode stuff. It offers a service that converts any selected block of text to the appropriate HTML unicode codes. This is tremendously useful for inserting a few non-English characters into a web page without having to mess with character sets or look up anything.
There are probably thousands of services available--you can basically either browse through what's there based on what you already installed, or if you want a particular service (like the Unicode conversion I use), hunt around for an app that provides it.