OSGi helps SOA by providing modularity, services, and dynamic loading capabilities at the JVM level. WSO2 Carbon uses OSGi as its core technology, allowing new functions to be plugged in modular bundles and providing a consistent platform for building a distributed SOA infrastructure from reusable components. While OSGi provides benefits like classloading management and proper modularity, there are also challenges to address like handling existing code and managing bundle start levels and patches.