Smart contracts

Smart contracts are immutable scripts that exist on the blockchain. They maintain a state (i.e. they store data) and they have functions that can be called. That’s it.

The smart contract doesn’t run on its own. The only way to interact with a smart contract is to call one of its functions.
There are read-only functions that can be called on any node to read some data out of the contract, and there are functions you can call that modify data in some way, but they require sending a transaction and paying gas fees.

Like all code, smart contracts can be written poorly, or well. The guarantees come from the implementation, not the nature of smart contracts themselves. The same is true for banking software or other non-blockchain apps.

Links

https://reddit.com/r/CryptoCurrency/comments/oe790p/no_one_seems_to_actually_know_what_a_smart
https://coindesk.com/learn/ethereum-101/ethereum-smart-contracts-work