(No major update in VMM 2016) While vm templates are useful for deploying individual virtual machines they have limitations (single vm only, limited guest customization etc.) when deploying more complex application structures.
In VMM 2012 a service is a set of virtual machines that are configured and deployed together and are managed as a single entity. You can use the Service Template Designer in VMM to create a service templates that define the configuration of the service. The service template includes information about the virtual machines that are deployed as part of the service, which applications to install on the virtual machines, and the networking configuration needed for the service (including the use of a load balancer).
A Service template allows for rich In-Guest customization (e.g. Windows 2008 R2 Role & Feature installation, application deployment and script execution.
After the service template is created, you can then deploy the service to a private cloud or to virtual machine hosts.

VMM 2012 R2 introduced support for scripts that create a guest cluster, allowing the script that runs on the first deployed virtual machine to be different than the script that runs on the other virtual machines in the tier.

Service Templates in 20012/2012R2 details here: http://bit.ly/107oLMh