A service dial is a dial that was replaced during a watch's lifetime by the manufacturer or an authorised service centre. The reason is usually damage to the original: tritium-lume that has degraded badly (vintage tritium can crack, fall out, or develop fungus), case-back gasket failure that allowed water into the dial, or scratch damage from improper crystal removal. The brand's standard service procedure was to replace damaged dials with current-production stock of the same reference - not 'restoration' but replacement.
The collector concern is twofold: (1) the modern replacement dial is often slightly different from the era-correct original (different lume formulation, slightly different font, different dial-thickness specs as production methods evolved); (2) collectors pay for originality, not just authenticity. A vintage Submariner ref. 1680 with a service dial trades at ~30% below an example with original tropical-aged tritium dial; a Speedmaster ref. 145.012 with a service dial trades 20-40% below original Cal. 321 examples. Detection: under loupe, look at lume colour (modern Super-LumiNova vs vintage tritium), font weight (vintage often slightly thinner), and dial-thickness (sometimes different).