In this context (IIRC) smart means “if this zip contains a single folder with contents, directly extract that folder, but if the zip contains files and/or folders, extract all that to a new folder named the same as the zip file”.
Some people zip folders while some people zip the files in a folder. Smart extraction just handles both automatically.
Depending on what you mean with “smart”, when I used Windows 7zip also offered to extract into a new folder through a context menu
In this context (IIRC) smart means “if this zip contains a single folder with contents, directly extract that folder, but if the zip contains files and/or folders, extract all that to a new folder named the same as the zip file”.
Some people zip folders while some people zip the files in a folder. Smart extraction just handles both automatically.