On the one hand, the Smart Fill tool can be a neat way to add color to a complex design with overlapping objects, but because a new object is formed, the tool also provides us with a quick way to create new objects from others. You can either use the tool to add color to here-to-fore difficult areas or use it as a strategic tool for quickly building new objects altogether. Because the name Smart Fill suggests filling with color, we might be slow to recognize its value as a shape builder tool.
Along those lines, keep in mind that if the tool is clicked anywhere on the page outside the overlapping objects, a new object made from both the existing shapes is formed on top of them and is filled with the color of choice. The original shapes remain intact and the new shape can be pulled off to the side awaiting further use. You can create new shapes from the area where two shapes overlap or create a new shape from both overlapping shapes, depending on whether you click within the overlap or outside of the overlapping shapes. In essence, the Smart Fill tool works much like the shape tools, trimming or welding as needed but in a more streamline fashion.