Smart Object
A container layer that preserves its source data, so transformations and filters applied to it remain editable.
In depth
Scaling a normal pixel layer down and back up destroys detail permanently; doing the same to a smart object re-renders from the original each time. Filters applied to one become smart filters with their own masks and adjustable settings, which extends non-destructive working into operations that would otherwise be final.
Examples in practice
A raw file placed as a smart object can have its white balance changed after hours of retouching above it.