A Smart Preview is copy of a photo file. It is a compressed, lossy file that has been resized so the longest edge measures 2540 pixels. It is saved, along with all other Smart Previews belonging to the same Catalog, in an .lrdata file.

The .lrdata file type is also used to store the previews that Lightroom makes so it can display thumbnails and full-size previews of the photos displayed in the Catalog in the Library module (Minimal, Standard and 1:1 previews).

Both .lrdata files are saved in the same folder as the Catalog (which should be on your computer’s internal or external hard drive). Smart Previews will allow you to keep editing without the need for the original files to be with you. 

For detailed instructions on how to create Smart Previews please check out the below Help Article: