It is 'Smart' :)
It works as you'd expect and desire:
When fully charged, the battery case depletes first, then the iPhone. So if at any time you took the case off, the Phone would still be fully charged, if possible.
When placed on charge via a Qi mat or Lightning, all power first charges the iPhone, then charges the battery case. As you would want.
Unlike 3rd party external USB chargers, iPhone knows it's not _really_ on charge - it knows it's not on a wall charger in other words. The phone still acts like it's on battery power. That means the phone won't drain your batteries by analysing the contents of your photo library, doing large iCloud syncs, and other things which only happen when on the charger. This means the Smart Battery Case actually lasts a lot longer in use than it's mAh rating would suggest - because the phone treats it like a battery, not a charge.
I hope this makes sense. :)