MSDN上面的答案：local database 和serviced based database的区别
A service-based database is a database that is only accessed through a server. It uses an MDF data file, which is SQL Server format. To be able to connect to a SQL Server database the SQL Server service must be running, because it's that that processes your requests and access the data file.
A local database is one that is local to your application only. It uses an SDF data file, which is SQL Server CE (Compact Edition) format. There is no need to install a server to access an SDF database. You simply distribute the DLLs that constitute SSCE along with your app and access the data file directly