Servants are the embodiment of heroic souls brought forth in the contest to obtain the holy grail. Only Servants can actually obtain the holy grail, and it only appears when one is left. Masters have the command spells which controls a servant, so partnership is essential. Servants are summoned in seven different classes, and are referred to by their class name instead of their true name. Reason being, that if you know the identity of the servant, you know their strengths and weaknesses.
Sometimes it is said that the soul called is that of a heroic person, but that's not always the case. It's better to think of it as a popular entity in the collective human mind that may be good or evil. Where this is a bit inconsistent is that the servant summoned is supposed to be what is in the collective interpretation, but the servant called forth is the person that actually existed.
Heroes in history are often remembered for items and abilities that are nearly as iconic as they are. These items and abilities are manifested as "noble phantasms". These attacks, abilities, or weapons can exceed the already immense power of a servant. They're used sparingly however, as they give away key information about the true identity of the servant. Noble phantasms have ranks ranging from C, to A+ and finally EX, however it's not clear how different one rank is from the other. Like everything else in battle, skill and opportunity can make even the weakest skill a crucial element in victory.