I am confused with android services and java thread.
Please help me to understand in which scenario i should use them.
As per my understanding
I believe the main difference is about Android system attitude. Service is a part of android infrastructure, so android recognizes service as a working part of application and considers killing service as a last option. Moreover, if your service is killed (e.g. because of memory lack) you can say system to restart it automatically, whenever resources available again. Moreover, you can tune up service priority in order to do it as important as foreground activity. As for threads, android does not recognize a thread as important part which must be kept. So usual threads has much more chances to be killed eventually.
For instance If you have an activity which start a working thread and then go background, as android do not recognize thread as a working part, it may think that application do nothing, because no activity or service running and kill the whole app, including the working thread.
Thus when you start a Service, you are telling system something like: "Hi. I'm doing some business here, don't kill me until I finish, please." and Android pay attention to your request.