Best way to implement Socket.io in android

First of all, the Application's onCreate() is irrelevant in your use case because you can't have a thread running in the background when it was first initiated in a non service code.

Also, I would recommend using Google Cloud Messaging instead of creating your own mechanism. It would be best for the device's battery life and much less code for you to handle.

If you do want to implement that chat completely on your own, Service is your only choice. You can also combine it with a singleton, but I wouldn't recommend that approach. You can use broadcasts and BroadcastReceiver for communicating between your Service and Activity, I think it is easier than a Bound Service since bounding to the service is asynchronous and it creates a lot of mess compared to simple broadcasting.

Service for Maintaining socket connection

As per Ofek Ron mentioned Service with BroadcaseReceiver is a better idea than BoundService. Because its a tedious process to maintain communication. And I also recommend pub/sub way of broadcasting, like Otto or EventBus (I myself suggest Otto by Square, which is clean and brilliant api).

Pros of OTTO
1. Cleaner Api
2. You can subscribe and publish in/to any Activity, Fragment, Service class.
3. Decoupling. (You have to couple as less as possible in your code).

And one more point is use START_STICKY in the onStartCommand() to start service after it is getting destroyed. See this reference.

MainApplication to start the service

It's best practice to start the service in the MainApplication that extends Application. Because the application will be killed when there is a memory constraint or user forcefully closes the app from the stack. So onStartCommand() will not be called frequently like if we have implemented in Activity.

Implementing online status

You can implement online status simply by implementing Application.LifeCycleCallbacks in the MainApplication class, which has most of the life cycle callbacks of activity and will be notified in the callback. By that you can implement Online status simply without any boiler plate codes. (If anyone need help here let me know).

Uploading or downloading images or files.

Best practice is to implement by IntentService because it's running in the a separate thread. I promise which will give the best performance because it is handled by android itself, not like threads created by us.

You can combine first way and third way like:

Create Sockets in your Application and declare them as static. So you can maintain and access them every where in you application. Don't forget to create separate Threads to perform the network operations, you can use ThreadPool to manage those Thread. If you want to update your UI from those Thread you can use Handler and Message to communication with UI Thread