Smart Clients are .NET Windows Forms applications that are launched from a
web server, or are downloaded through a web browser from what I understand.
They can be run in a secure temporary area on the client pc and use sepcial
security permissions.

If you placed a app called, for example, myapp.exe in c:\inetpub\wwwroot

You could launch this from any webpage by creating a link to
http://localhost/myapp.exe

You'll notice your browser pause for the first time of launching this app.
This is because a local version of the application is first downloaded via
the web server, to your client PC. Once on your PC the application cached and
launched with the restricted permissions.

The second time you launch the application you'll notice it's much quicker.
This is because .NET automatically checks if a newer version of the
application exists on the web-server than that, that was previously
downloaded. If no newer version exists, it doesn't bother downloading any
updated components and launches the application from the cached version.

I don't know if this will help. Smart Clients is one of the areas that I've
found huge difficulties in finding explanations on how to use. There's nice
wonderful webcasts on Channel 9 that show how it will be used with Windows
Vista that looks exciting, but nothing showing it in use right now, nothing
that I understood properly. Everything I found left me with more questions.
So after little trial and prototyping I had a better understanding and knew
better what I was searching for on the internet to find my answers.

Good luck!