I know, it's a little weird to do a Wednesday Q&A on a Friday, but that's the type of week it's been. The diagram that makes up today's image shows in very little detail how I work with Smart Object on a very simple image. It goes from bringing in the original RAW file from Adobe Photoshop Lightroom 4 (LR4) to Adobe Photoshop CS6 (CS6) and the way I use Smart Objects to get to the Ready For Print version in CS6. Using this diagram I can go all the way back to the image in LR4, make any LR4 adjustments I'd like and have them reflected all the way back up to the Ready For Print image. I can make any changes in any step. The work flow becomes completely non-destructive. With this method you do not have any dead ends that would force you to start over at any point. To see the list of what goes on in each step, hit the "Read More".
In LR4 I would do any of the things that LR4 is good at. I'd go to Camera Calibration. Let it do its thing. Then Lens Corrections to make the image look like the lens thinks it should. I'd correct the white and black points using ALT White Slider or ALT Black Slider in the Basic Panel. Any highlights or shadows that need tweaking. Sharpening, apply a little Vibrance, adjust the colors in the HSL Panel. All the way down the list of things that are best done in LR4.
I'd bring the image over to CS6 (or Adobe Photoshop Elements 11 [PSE 11]). In LR4 it would be Photo/Edit/Open as Smart Object in Photoshop. On the first instance of having the Smart Object come into CS6 I'd do things like clean up any sensor dust or blemishes on a portrait. Remove any "trash" littering the image. Clean up the edges and remove distractions. From there I'd make two copies of the image using New Smart Object via Copy (Layer/Smart Objects/New Smart Object via Copy). It's important to do it this way rather than doing a straight copy (CTRL J). If you make a "normal" copy, anything you do to one copy will be applied to all Smart Objects. The New Smart Object via Copy gives you a completely separate Smart Object and different adjustments/corrections/modifications can be applied to each Smart Object. On one New Smart Object I'd double click on the SM Icon for one of SM in the Layers Panel. On that I'd make any corrections needed to the sky (for landscapes) or backgrounds (in portraits and such). Double clicking the icon opens the Smart Object and lets you have access to the original image. On a New Layer, do all your corrections. To get back to the top Smart Object you would need to do File/Save -- File/Close your way back up to the top. It's important to do File/Save and not do any sort of Save As. Save As will "break the link" between the layers of Smart Objects. You want to maintain the links all the way back to the RAW file in LR4.
You can travel back and forth as much as you'd like (need) to. You can make changes at any point. Smart Objects give you total control over your images.