The term covers institutions, funds, market makers, and insiders. The reasonable core is that these participants have better information, lower costs, and more capacity than retail, and that their flows move prices.
The problem is that retail traders cannot see them. Claims to be following smart money on a chart are usually inference from price and volume, and often just a confident name for an ordinary pattern. Genuine observable proxies exist - reported positioning, filings, flow data - and they are delayed and aggregated. Treat any indicator promising to show institutional footprints in real time with scepticism. See dumb-money.
Related: dumb-money, order-block, market-maker, narrative-fallacy