I like this explanation:
Started services are easy to program for simple one way interactions
from an activity to a service, however, they require more complex and
ad hoc programming for extended two-way conversations with their
clients.
In contrast, bound services may be a better choice for more
complex two-way interactions between activities and services. For
example, they support two-way conversations.
So, as you said, If you want to interact with the service use bound service. With started services (or intent services) you could do it, only it would require more complex programming.
(by Douglas Schmidt: https://www.youtube.com/watch?v=cRFw7xaZ_Mg (11'10'')):
Here is a summary that helped me understand (thanks Doug):
Started services are launched by other application components (such as an activity or even a broadcast receiver) and potentially run indefinitely in the background until the service is stopped, or is destroyed by the Android runtime system in order to free up resources. A service will continue to run if the application that started it is no longer in the foreground, and even in the event that the component that originally started the service is destroyed
A bound service is similar to a started service with the exception that a started service does not generally return results or permit interaction with the component that launched it. A bound service, on the other hand, allows the launching component to interact with, and receive results from, the service.