Where is the managed metadata service and the term store set up in SharePoint?  Is it at the farm level or the site collection level?

The managed metadata service, and thus the term store, is configured at the farm level.   Term sets created in the term store at the global level can be used by any site collection.  These are called global term sets. 

You can also set up local term sets at the site collection level which are only accessible within that site. Site level term sets will show up in a specific Site collection term group when you access the Term Store via site settings, as shown in the red circle in the screen shot below.     If you access the term store via central administration, you will not see the site collection specific term sets.   So, to summarize, local term sets are only available within the site collection they were created in.  

 

Local term Sets in SharePoint Term Store