Movie files contain video and audio information (called streams—but the name's not important).
When you drop a media file on it and choose a conversion type, Smart Converter immediately analyses your file and works out exactly what part of it needs to be converted to achieve the desired output.
In many cases neither the video nor the audio need converting. In some cases just one or the other need converting, and in a few cases both will need converting.
Doing this analysis ensures Smart Converter only converts stuff that needs converting, and leaves the rest alone. This has a two-fold advantage over many other converters; it's usually very fast and maintains the highest possible quality of video and audio.
Here's a list of the four conversion speeds that you might see and what they mean:
Whenever a movie file's video or audio has to be converted there will always be some very slight loss of quality, but in most cases the change is hardly perceptible.