There are two types of "service" type dogs. The ones jujube described. I know someone who is soon to get one--18 year old autistic who will have the dog to go to the store, etc. He lives with his family but needs help to cross streets safely (among other things).
There is another type that is a comfort dog or cat, I'm not sure if they're allowed in stores/restaurants, but they are allowed in non-pet government or HUD housing. This is likely the lady with the three pups, although I doubt you could qualify for more than one.
Those are called Emotional Support Animals or ESA's. As you said, they have some privileges but not the same as "service" animals.
Then there are Therapy Animals, which is a good thing. They are the dogs, cats, rabbits, etc. that are taken to schools, hospitals and nursing homes. They need to be certified by a reputable agency in order to get into the facilities. They do a lot of good with upset children and agitated or withdrawn elderly persons. At our library, kids can check out a "reading dog" to read to. Kids love it, the dogs love, win-win.
I went to a service dog graduation ceremony once, where the dogs and their new owners were "graduating" from the last stage of the rigorous training. One of the dogs was going to be a "court dog". When children are brought in to be examined for physical or sexual abuse or neglect, the dog will be there to comfort them. During depositions and if the child has to testify in court, the dog will sit beside the child at all times. Hugs and kisses will be available at the drop of an ear. There will be a comforting expanse of fur to hide faces in if needed. Quite often the child will "tell" the dog something he/she wouldn't say to adults. I have a real hard time comparing this kind of dog to a Pom dressed for Easter, when it comes to providing a "service".
Which bring up the question: aren't almost all pets "emotional support animals"? You come home from work, exhausted, worn out from the drive, your boss chewed you a new one at work and you are DONE! Your dog meets you at the door.....OH BOY! MY FAVORITE PERSON IN THE WORLD IS HOME!!! I LOVE YOU, I LOVE YOU, I LOVE YOU!! YOU ARE A GOD!!!" and you just HAVE to feel better. Of course, it's a 50-50 thing with cats......it's either "OH BOY, THE PERSON WHO FEEDS ME IS HOME! LET ME RUB SOME FUR ON YOUR PANTS LEG TO SHOW YOU HOW MUCH I LOVE YOU!" or it's "OH, HAVE YOU BEEN GONE? I DIDN'T NOTICE. WELL, DON'T JUST STAND THERE, FEED ME! NOW!!!"