Are you still uncertain of what the purpose of a Smart Object is in Photoshop? Here is an excellent explanation of one of Photoshop’s most powerful tools.
You have likely heard of Smart Objects before, but few truly understand what they do. In this video, Colin Smith of photoshopCAFE teaches about their many uses in Photoshop. A Smart Object is a layer that preserves an image's original content, which enables you to perform nondestructive edits to it. To explain, Smith uses a simple explanation of placing an object into a plastic baggie. The baggie can be painted any color, but the object inside remains unchanged. This is similar to how a Smart Object functions.
The best part of this tutorial, however, is when Smith shows the many doors that Smart Objects can open for you while editing. This includes scaling your image without losing data, the power of smart filters, the ability to copy the object multiple times and simultaneously adjust them, and the option to revert the changes back to its original form at any time. Smith demonstrates all of these functions through seven clear examples in his video.
I believe Smart Objects are one of the most underused tools that Photoshop offers, especially after watching this video. If you want to see the power of Smart Objects at work, view the video above.