The service bits are a field in the version method which indicate what services a node supports. These services are features that a node supports and tells other nodes which connect to it what it may or may not be able to request from the node. They also indicate what that node can receive.
For example, if a node has the
NODE_SEGWIT service bit set, then when another node connects to it and they see
NODE_SEGWIT, they know that they can send segwit blocks and transactions to that node, and can expect to receive segwit blocks and transactions from that node. If they did not see
NODE_SEGWIT, then they would know to strip segwit blocks and transactions of their witnesses before sending the transaction to that node.