A Smart Font is a .OTF font that has alternate characters and ligatures. A ligature is where two or more graphemes or letters are joined as a single glyph. It is common to see AE or OE as a ligature (Æ or Œ ). When you use a regular font, you have to type a code to create a ligature. For AE you must type alt + 0198 in Windows. But when you use a .OTF Smart Font, as soon as you type AE it will automatically be replaced with Æ if that was one of the characters in the Smart Font.
While a .OTF font will work in any program, many programs don't necessarily support the ligature features that allow you to have the ligatures automatically replace certain characters. Adobe has always been great about supporting ligatures. Word 2010 and newer supports it. There are other programs that support the feature but it is changing all the time. Use a search engine to find if the program you use supports it. If not there are work arounds:
To use ligatures in OTF fonts in Windows without supporting programs like Adobe, see this tutorial.
To use ligatures in OTF fonts on a Mac without supporting programs like Adobe, see this tutorial.
Below is the font ZP Mother Interlock and a view of all of its additional ligatures.
