If Web Applications are about delivering Content, then Service Applications are all about doing the heavy lifting in your Farm.
Service Applications are responsible for everything from Search, to Managed Metadata. From managing add-ins, to User Profiles.
Under the hood, it’s Services that do the actual work. A Service Application is an administrative conceit that wraps Services.
Each Web Application in your Farm can be configured to consume specific Services.
Web Applications don’t talk directly to Services.
Instead, they invoke a Proxy or Service Connection.
For administrative purposes, we group these Proxies up into Proxy Groups, and allocate those to Web Applications instead.
In other words:
The Web App’s connected to the Proxy Group.
The Proxy Group’s connected to the Proxy.
The Proxy’s connected to the Service App.
The Service App’s connected to the Service. (Now hear the word of the Lord).