For each release of the software, SolidWorks generally creates five major service packs, and minor "point" releases (such as SP 2.1) as necessary. The initial release of a version such as SolidWorks 2010 is SP 0.0. The service packs are available to all active subscription customers. If a service pack has a major flaw that SolidWorks thinks should be fixed before the next service pack, they issue a point release.
Service packs are usually released approximately every six weeks. These service packs are usually used to fix bugs as listed in the Release Notes that you could find in the Help menu, or in the same area in the SolidWorks Customer Portal from which you download the service packs. From time to time new functionality can show up in service packs, but this is usually reserved for new major releases unless the added functionality is minor.
Many users establish a best practice where they do not install a new version prior to SP 3.0, and some wait all the way to SP 5.0, which should be the last service pack for the version. Depending on your business, this may or may not be something you want to follow. Also, be aware that the five service packs are not guaranteed as a rule, but the last several releases have followed that pattern.
I tend always to install the latest service pack available for two reasons. First, because I write ...