How Watch Servicing Actually Works
What a service includes varies enormously, and so does what it does to the watch.

Mechanical watches need periodic servicing, and the word covers everything from a light clean to a full overhaul with parts replaced. Knowing what you are paying for is the difference between maintaining a watch and altering it.
What a full service involves
The movement is disassembled completely, parts are cleaned, worn components are replaced, everything is reassembled and lubricated with several specified oils and greases, and the movement is regulated and tested across positions.
Gaskets are replaced and water resistance is tested. The case and bracelet may be cleaned, and polished if requested.
Intervals
Manufacturers publish recommended intervals, typically measured in years. Actual need depends on use and conditions.
The signals that a service is due are a rate that has drifted noticeably, a power reserve that has shortened, or moisture inside the crystal — which warrants immediate attention rather than a scheduled appointment.
The polishing question
Many services include polishing by default, and for a collectible watch this can reduce value substantially by softening the case's original edges.
If you care about the watch, instruct explicitly in writing: no polishing. Reversing it is not possible.
Original parts
Ask whether replaced parts will be original manufacturer components and whether the old parts will be returned to you. For collectible watches, retaining original parts matters, and some manufacturers' service centers replace components as a matter of policy in ways collectors object to.
Manufacturer or independent
Manufacturer service guarantees correct parts and specification, and is generally more expensive and slower. A skilled independent watchmaker may work more sympathetically with a vintage piece and be more willing to preserve originality.
For a modern watch under warranty, use the manufacturer. For a vintage one you care about, a specialist with a reputation in that reference is frequently the better choice.
Before handing it over
Get a written estimate, photograph the watch from several angles, and agree in writing what will and will not be done.