Well, it's not a programming tool per se. It's a templating system that separates business logic from presentation logic. For example, you could have a file called "index.php," where you define a bunch of variables. Then, you call a smarty template, which prints out the variables in tables and with pretty colors.
Smarty syntax is much simpler than PHP's syntax. Therefore, a designer can work on the presentation logic, while a programmer works on the business logic. It's a great tool, so if you're interested, check out
smarty.net!