A more thorough explanation:

Definition: “Time served” is a term used by courts when a defendant's previous time spent in custody while awaiting sentencing is deemed to be completely satisfied. This means that the sentence imposed is the same as the time the defendant has spent in jail, and the defendant is set free.

For example, if a defendant spends three years in jail between their arrest, sentencing, and all the procedural steps in between, and the defendant is ultimately sentenced to three years for the conduct, the sentence imposed will be “time served” (i.e. the defendant already served three years, so the defendant’s sentence has been completed and the defendant will be released from custody).

The term can also be used to refer to credits afforded to a defendant’s sentence for previous incarceration. For example, if a defendant spent three years incarcerated before being sentenced, and received a sentence of five years, their “time served” credit would mean that they would only have to serve two more years to complete their sentence due to the application of that credit to their sentence. In that case, they would be sentenced to “time served plus two years,” or some variation along those lines.

States have varying laws on the specifics of time served awards. For example, in some states, like Montana, time served credit can be awarded for time spent in custody regardless of whether the defendant was also being held in connection with another matter in a different county. In states like Washington, defendants eligible for bail are still eligible for time served credits, whereas, in Florida, that is not always the case.

Depending on the state, the term “time served” can be also extended beyond the scope of incarceration to include credit for time spent on house arrest, supervised release, and/or in a form of custody other than incarceration, such as rehabilitation. For example, in Pennsylvania, a defendant who voluntarily spends time in inpatient alcohol rehabilitation will have that time credited towards a subsequently imposed sentence of incarceration. On the other hand, in South Carolina, “time served” only refers to time spent confined in penal institutions.

Example: John was arrested for theft and spent six months in jail before his trial. After his trial, he was sentenced to six months in jail. Since he already served six months, his sentence is considered “time served,” and he is released from custody.

Explanation: In this example, John's previous time spent in jail while awaiting trial is deemed to be completely satisfied by the sentence imposed. Therefore, he is released from custody since he already served the same amount of time as his sentence.