As I understand it, when inside a factory I return an object that gets injected into a controller. When inside a service I am dealing with the object using this
You can understand the difference with this analogy - Consider the difference between a normal function that will return some value and constructor function that will get instantiated using new keyword.So creating factory is just similar to create normal function that will return some value(primitive or an object) whereas creating service is like creating constructor function(OO class) of which we can create instance using new keyword. The only thing to notice is here is that when we use Service method to create services it will automatically create instance of it using dependency injection mechanism supported by AngularJS