it's a computer program that controls the transfer of digital currencies and/or assets between parties under certain conditions. Think of a traditional contract: there are one or more parties involved, multiple rounds of negotiating and constant drafting and re-drafting of stipulations. The end goal is an agreement where the parties commit to performing some sort of act in exchange for something of value. However, many times we see contracts being the source of legal disputes due to a variety of reasons--mainly some sort of miscommunication. Therein lies the emergence of smart contracts! They are "smart," you could say, because they automatically enforce the agreed upon action between parties (through code), and more importantly facilitate these business arrangements without the formality and the tedious practices associated with the traditional route.
Check out the link below if you want a much better explanation. They juxtapose the technology behind smart contracts with that of a vending machine transaction
https://blockgeeks.com/guides/smart-contracts/
Hope this helps!
