Smut is fiction written for arousal, with the sex on the page rather than behind a closed door. The word is old and was once an insult, and readers took it back: on reading forums it is now used warmly, the way "trashy" is used about a favourite film.
Smut and erotica
Publishers and stores prefer "erotica", which sounds like a category and can be printed in a catalogue. Readers prefer "smut", which sounds like a recommendation. In practice they point at the same shelf, with one difference of emphasis: erotica implies the sex carries the story, while smut is happy to admit the story is there to carry the sex.
This matters when you search. Apps and stores file their libraries under erotica, romance or "mature", because those are the words a content policy can live with. Search "smut" on a store and you will get less than you expect, which is why readers swap recommendations on forums instead.
How much smut is smut
Romance readers measure it in peppers or flames, one to five, and no two people use the scale the same way. A book described as four peppers usually means several explicit scenes and language that does not look away. A one-pepper book may have nothing at all, which is how disappointed reviews happen.
Scales are set by whoever is selling, so treat them as a direction rather than a measurement. The reliable signal is other readers using the same words you do.
Why the word matters to apps
An app cannot put "smut" in its store listing without inviting a policy review, so it uses "spicy", "steamy" or "mature" instead. When you see those words, the app is signalling to you while staying inside its store's rules, and the amount of actual explicit content underneath varies enormously.
Related reading: spicy romance, which is the marketing word for the same thing, and the rest of the glossary.