Unlike traditional contracts, Smart Contracts are simply pieces of code that run on the blockchain and are designed for owners of Ethereum Wallets to “sign” and interact with them. Smart Contracts enable the creation of Decentralized Applications (dapps), including the creation of games, programs, digital collectibles, online voting systems, financial products, and many other items.
For example, vending machines are real-world basic examples of Smart Contracts. Everyone who puts the correct amount of coins into the machine can expect to receive a product in exchange. In the same way that vending machines sell things, a Smart Contract can automate real-world contractual arrangements. Similarly, on Ethereum, the value of contracts may be held and only released after certain conditions have been met.
For more advanced learning on dapps, see the following article from ethereum.org:
And for more on smart contracts, see this article: