A Switch mode power supply(smps), is a more advanced power supply than the (usually black) ones you are used to just plug in the wall. It is much more efficient, up to 80-90% of the input power is transformed into output power. As opposed to the older models that have an average output efficiency around 30-40%.
SMPS is the kind of power supply found in your PC.
The way it works is pretty simple:
If you have 10V input and you want 5V output, the SMPS cuts the 10V into eg. 10V in ½ a second and 0V in the remaning ½ a second, then the SMPS filters the pulsating current into 5V continous current, and thereby only using circa half of what a conventional power supply would use.