Service road routes the same as Street. Therefore Waze may send someone down an alley as a shortcut.

Parking lot road suppresses traffic jams while service road does not. So if someone stops in an alley to park/unload/etc, it may create a jam.

For those reasons, parking lot road is the best choice. An alley may parallel the main road for 20 blocks, but I doubt many people would want to drive on the alley for all those blocks and they will just cut over when they hit the block they need. Parking lot road gives that result.

The only difference is traffic reporting -- I think PLot will suppress jams while Private Rd will not. At least I think that was how it was at some point