SIE stands for Serial Interface Engine. The SIE converts signals received and sent by the USB transceiver into packets. An ordinary SIE does basic signal housekeeping, such as: CRC generation and error checking, Bit stuffing, Clock regeneration, Sending and checking handshake packets. A smart SIE delves deeper into the USB protocol, handling higher level protocol issues so the programmer does not need to bother with them.
Here is an example. When a USB host sends an IN request to a peripheral and receives valid data but the wrong data toggle, what should the host do? A normal SIE would present the results (good data, bad toggle) to the microprocessor, and leave it to the firmware to respond correctly, according to the 622-page USB spec.
Here is what the MAX3421E's smart SIE does. The MAX3421E sends an ACK handshake, but does not complement its own data toggle or generate the interrupt request RCVDAV (Receive Data Available), which would indicate to the CPU that the received data is valid. If ACKing a packet with a bad toggle value sounds counter-intuitive, please review the MAX3421E Programming Guide for more details. The MAX3421E handles this part of the USB protocol so the firmware does not have to. For another example, as a host, the MAX3421E's smart SIE automatically generates 1ms frame markers. The CPU connected to the MAX3421E launches host packets by writing a register called HXFR. If the CPU writes the HXFR register late in a frame and there is not enough time in the frame to avoid collision with the frame marker, the SIE automatically defers the sending transfer until the next frame.