@ravish I remember struggling wrapping my mind around this at first, too. There is a lot going on, perceivably by magic. Although, once you understand it, it's quite simple.
I just read every blog/video I could find on it.. then went back to the manual and read it until it made sense. Playing around with a pet project also helped to hammer home the concepts.
Here are some resources that may help:
https://m.dotdev.co/understanding-laravel-service-container-bd488ca05280
https://stackoverflow.com/questions/37038830/what-is-the-concept-of-service-container-in-laravel
https://laracasts.com/series/laravel-6-from-scratch/episodes/38
https://laracasts.com/series/laravel-6-from-scratch/episodes/39
Then go back and read this entire manual, and hopefully it will make more sense: