Service types are mainly used to denote damages in visual inspections.
You can create service types and select damage icons for them...
...so that when you tap the 'Wrench&Hammer' icon in the lower-left corner of the 'Visual Inspection' screen, you can see these service types with the appropriate damage icons.
You can assign services to service types...
...so that when you tap a service type on the 'Visual Inspection' screen, you can see the services assigned to this type.