I'm speaking in the perspective of Windows development, but the concepts are similar with other Operating Systems, such as Linux.

What are services?

Services are application types that run in the system's background. These are applications such as task schedulers and event loggers. If you look at the Task Manager > Processes, you can see that you have a series of Service Hosts which are containers hosting your Windows Services.

What difference does setting MongoDB as a service make?

Running MongoDB as a service gives you some flexibility with how you can run and deploy MongoDB. For example, you can have MongoDB run at startup and restart on failures. If you don't set MongoDB up as a service, you will have to run the MongoDB server every time.

So, what is the difference between a network service and a local service?

Running MongoDB as a network service means that your service will have permission to access the network with the same credentials as the computer you are using. Running MongoDB locally will run the service without network connectivity.(Refer Source here)

After trying for several hours, I finally did it.

Make sure:

1. you added the <MONGODB_PATH>\bin directory to the system variable PATH
2. run command prompt as administrator

Steps:

step 1: execute this command:

D:\mongodb\bin>mongod --remove

Step 2: execute this command after opening command prompt as administrator:

D:\mongodb\bin>mongod --dbpath=D:\mongodb --logpath=D:\mongodb\log.txt --install

NOTE: you can also append --serviceName MongoDB after the command above.

That's All!

services.msc

// OR

net start MongoDB

And look for MongoDB service and click start.

NOTE: Make sure to run command prompt as administrator.

If you don't do this, your log file (D:\mongodb\log.txt in the above example) will contain lines like these:

2016-11-11T15:24:54.618-0800 I CONTROL  [main] Trying to install Windows service 'MongoDB'
2016-11-11T15:24:54.618-0800 I CONTROL  [main] Error connecting to the Service Control Manager: Access is denied. (5)

and if you try to start the service from a non-admin console, (i.e. net start MongoDB or Start-Service MongoDB in PowerShell), you'll get a response like this:

System error 5 has occurred.
Access is denied.

or this:

Start-Service : Service 'MongoDB (MongoDB)' cannot be started due to the following error: Cannot open MongoDB service
on computer '.'.
At line:1 char:1
+ Start-Service MongoDB
+ ~~~~~~~~~~~~~~~~~~~~~
    + CategoryInfo          : OpenError: (System.ServiceProcess.ServiceController:ServiceController) [Start-Service],
   ServiceCommandException
    + FullyQualifiedErrorId : CouldNotStartService,Microsoft.PowerShell.Commands.StartServiceComman

You may want to check this issue.

- run: |
        Set-Service mongodb -StartupType Automatic          
        Start-Service -Name MongoDB

from this comment actions/runner-images#5949 (comment)

The following works fine for me

mongod --install --serviceName "Mongo DB instance" --serviceDisplayName "Mongo DB instance" --port 27017 --dbpath C:\data --logpath C:\data\1.log --smallfiles

Of course you should change the parameters to fit your needs. Make sure that the appropriate folders exist. After installing the service you start it as follows

net start "Mongo DB instance"