I have used it twice now.
1) on chicken, for about 30 min then finished off at 375
2) pork butt, for about 4 hours, then finished off at 225
I see a lot of smoke

Of course I have been happy with the amount of smoke prior, this is just a bonus! Whereas the previous low temp was 200, I would see temp swings from about 190-205 in this mode. Plenty of smoke. In 'smoke' mode, I see temps from about 160-200. Understand the smoke mode is a temp range in and of itself, it is not a 'smoke' mode at whatever temp you select. It isn't like the camp chef mode (as I understand it)
As far as what's happening, it seems to me the SF is dumping pellets in the cookpot and allowing them to smolder before increasing fan speed to ensure they're lit and burning. This causes a lot more smoke to be continuously produced. I found the results to be very good, but I was always happy with the level of smokiness in food cooked on my sf.