The federated login will allow you to authenticate the external users of a service portal by using their Google, Facebook or Twitter account. The advantage of using federated login is that your customers will not need to create an account to access the service portal. Instead Google, Facebook or Twitter will act as an identity provider and verify the identity of the customer.
Let's assume an organization called 'Contoso'. They have a service portal called 'Subscriber registration' in which the new customers have to fill up the data required for the subscription. To make it easier for the customers to subscribe, Contoso wants them to be able to use their Google accounts. Contoso can achieve this by using the Federated login option in service portal. When the customer visits the service portal they will be displayed an option to access it by using their google account. Once they enter the correct credentials, then their account will be authenticated and they can access the service portal.