@Pramod Kumar As a brief overview I can say , The entitlements actually tells support agents about what all kind of services are available for the particular customer.
Whereas service contract can define detailed level of services which a customer can get from the company.
So for ex. If we are a customer of airtel and we are using broadband,Mobile and 3G services. Now say there are other services also by airtel such as digital TV or Fibre optic net etc which we are not using.
So as soon as the customer is reached out the support representative, saying he is having the trouble with broadband, the support rep can check the entitlement of the contact(i.e. customer) if he/she is eligible for broadband support or not. Say The above customer is not eligible for digital TV support and if he/she calls the airtel to check their digital TV service which is provided by some other operator,so by checking entitlement airtel support rep can directly reject the customer request as that entitlement record contains only the broadband,3G and mobile services.
In technical terms you can say the entitlement is defined on accounts, contacts, assets, or service contracts.
Now where as service contract is like while purchasing the broadband from operator they ensured you for the 1 year onsite warranty. So once the customer support rep receives the case request from customer after checking entitlement if the service contract is signed by the company with customer for a year for onsite warranty. This will ensure and a case request is made with the proper entitlement attached to the case request.
HOpe this clarifies your doubt.