In its simplest form, it lets your "smart" electric meter talk back to the utility and record your usage by hour, so you can adjust your habits to take advantage of lower, off-peak rates.
Customers with smart thermostats reduced their usage by 27%, and customers with gateway systems, which adjust the electricity use of multiple appliances, reduced their usage by 43% during the peak hours.
Indeed, there was such an uproar in California when the authorities proposed letting power companies adjust the thermostats in people's homes remotely so as to lower overall electricity consumption at peak times the idea was hastily abandoned.