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A smart playlist is one that iTunes creates for you based on your selections. For example, you can create a smart playlist for your ten most-played songs, specific artists, or a specific genre, and you can even limit the playlist to a certain size based on the number of songs or their size (in MB or GB).
To start creating a smart playlist, select File New Smart Playlist (alternatively, on Windows you can press Ctrl+Alt+N and then select New Smart Playlist from the File menu; and on the Mac you can press Command+Option+N and just input the search parameters).
Figure 29–17 illustrates that you have many options for creating a smart playlist. All of the default playlists you see in iTunes are smart playlists. Default categories include 90's Music, Classical Music, Music Videos, My Top Rated, Recently Added, Recently Played, and Top 25 Most Played.