What do you understand by state of a service?

There are two types of states: Stateful: If the IS receives requests from repeating clients then this state is useful. The client can be connected to IS and authenticated once and then issue many service invocations during the same session. Stateless: If clients typically send a single invocation requests to IS at a time then use stateless.  
Using a stateless services prevents the creation of session that will sit unused, taking up resources in IS.