How would you set up Prometheus and Grafana for microservices monitoring

How would you set up Prometheus and Grafana for microservices monitoring?
This would be the configuration of monitoring tools for microservices, including tools that are able to handle distributed systems with real-time metrics and service health checks. This question gets into the configuration of Prometheus to collect metrics across several services, while Grafana is set up to effectively see and monitor these metrics. Example configurations can demonstrate best practices in terms of how alerts and dashboards can be set up and also specific metric collections in a Kubernetes or containerized environment.