I might phrase it more generally... you can relate any keyable thing to the rotation of the bone.
Typically Smartskin is used to relate the deformation of a mesh (mesh deformations are something that can be keyframed) to the rotation of the bone.
However it could be anything... color properties, bone scaling, hair length... anything that can be keyframed can be keyframed to have a certain setting at a certain rotation of the bone the "Smartskin" belongs to.
And, of course, A:M will interpolate those settings between the other rotations of the bone.
Powerful stuff!