I think smart burn mainly has to do with how liteons deal with poor quality or unrecognized media. If it doesn't have a predefined write stratagy, then it uses smart burn to try to determine how best to burn the media. I think it can also detect that media is not burning right and can adjust the write stratagy in the middle of the burn. I'm not sure about the technical aspects of it, but liteon drives are learning drives so they can adjust write stratagys, even with known medias.
As far as the smart burn program (utility), I think it just reports whatever the max speed listed in the firmware is, which again, is usally the recomended burn speed, unless the media is unknown. On my 8x liteon, it reports the burn speed for mcc004 (16x media) as 2.4x. Obviously it doesn't recognise this media and it wants to use a generic write stratagy and smart burn technology to try to burn this disk. I'm running omnipatched firmware that allows overspeeding. The smart burn utility reports a max speed of 8x for ricohjpnr01 and ritek r02, both of which are 4x medias. Ricohjpnr01 burns quite well at 8x but ritek r02 does not (on my burner). Obviouslly it is just reporting the max speed listed in the firmware, not testing the disk to tell what is the best burn speed.
In most cases, burner manufactures write the optimum firmware to burn disks at their rated speed. Thats why it is usally best to burn at the rated speed. The drive has proper instructions to burn at the rated speed, where if you burn slower, it might be adopting a less developed or even a generic write stratagy to allow it. Thats in most cases. Occationally, a manufacture might determine that a particular media is of high enough quality that it can burn faster than it's rated speed, and they develope a write stratagy to burn it faster. They sometimes might determine that a particular media is not of good enough quality to burn at its rated speed, so they write the firmware for optimal burning at a slower speed (and the drive may not even support writing at the rated speed).
Disks burning beter at slower than rated speeds is about as common as disks burning at higher than rated speeds. You cannot just take any disk and burn it faster, even if it is good enough quality. The drive has to have or be able to learn a proper write stratagy to do it. Sometimes it can be done (especially with modified firmwares that change those write stratagys), but most of the time media burns beter at the corect rated speed than faster. The exact same thing is corect about burning slower. If the drive doesn't have a proper write stratagy to burn slower, it may or may not be able to learn it (and modified firmware might provide a write stratagy change to allow it), but in general, it will actually burn worse at the slower speed as the drives write stratagy is most liklly optimised for the corect speed, not slower. Usally it is only with poor quality media that is not good enough to burn at its claimed write speed, that it is worth exploring how well it writes slower.
One exception would be for instance a 4x drive, that has write stratagys developed to burn 8x media at 4x (since that is all the drive is capable of) or an 8x drive that has has proper write stratagys developed to burn 16x media at 8x (again, because that is all the drive is capable of so that is what they developed the write stratagy for). Often they just don't suport the faster medias though (like my liteon reporting mcc004 16x media as 2.4x media).