A smart tag is a new UI widget attached to a control or component's selection UI that provides easy access common actions and properties. A good way to think of a smart tag item is a DesignerVerbs on steroids.
The API for smart tags can be found in the DesignerAction* classes. The DesignerActionItem class represents a single item on the smart tag panel. The DesignerActionList class represents a collection of DesignerActionItems. The DesignerActionService manages the lists of items for each component on the design surface.