In my prior post, I wrote about the smart grid. Here's a quick bit about how Smart Meters play a role. As I mentioned before, the Smart Meter provides communications to the power plant; the plant can learn if you're getting the proper voltage, and also how much you're using at the moment. But, this is a simplification.
As new sources of energy come online, their power can be added to the grid at any point ... including power from your house. Your house may have solar panels or wind generated power sources. Indeed, if you have a hybrid or all-battery car, the power in your batteries may be used during periods of higher demand and replenished later. If you're making more than you're using, the whole system can adjust instantly to route that power to the most efficient destination, perhaps your next-door neighbor. Smart Meters might also allow the power company to alert you of possible problems.
Smart Meters aren't just for electricity, either -- they could accomplish the same role for gas, water and other metered services. And of course this means that no one has to come to your house to do a meter reading.
Some appliance makers are now making Smart Meter-enabled appliances. If you want your laundry dry in the morning, your dryer can ask the power company what the best time is to do the work.
Smart Meters appear to be converging on a single data-communications standard called Zigbee -- there are a bunch of ways that Zigbee-enabled devices can use your Smart Meter to do cool and unexpected things. You could have a real-time meter of which appliances are using how much energy (kind of like the PowerCost Meter that I use in my house now, but much more elegant, simple, and detailed). Check out the Zigbee site -- it's pretty cool.
Smart Meters are an important part of the Smart Grid -- far from the only important part, but integral and necessary. You'll probably have one installed in your house in the next several years if you don't have one already.