Resource
A resource is a high-level entity that will be using the services that we provide. Usually a resource will be the client application that our tenants develop and maintain. The resources live within a container or a boundary called a namespace.
A resource is classified into two types based on the nature of its consumption.
A resource name is unique within a namespace. However, the same name can be used for both an application and a service.
Application
An application resource is a client application that is intended for human interactions. It could be any web application designed for desktops and handheld devices, or it could also be a native mobile application designed for any devices.
Service
A service resource is a client application that is intended for machine interactions. It could be a REST API or a web service or any application that speaks to another machine.
The services can be further divided into two types based on the way they work.
Application Service
Application services serve as a back end for the front end web-based applications. It could be consumed only by the applications that are linked via service contracts.
Standalone Service
Standalone services are protected or public APIs exposed to be consumed from another service. It could be consumed by another standalone service or an application service that are linked via service contracts. But they cannot be consumed by an application directly.
If you are still not sure of the resource type to be selected. Check this for common system design patterns.