A smart asset is an entity which models a digital or real world item and is embedded into the blockchain. If we take the example of a game asset such as a sword we can model its attributes and behaviour in code which when invoked will execute the code and apply the logic.
Smart assets are defined in code and expose a set of external API's that can be invoked by the caller. Both the data that is created by the smart asset and the companion code is stored immutably in the blockchain within versioned transactions. When the code for the smart asset needs to mutate any of the associated data it creates transactions with the updated data and the latest version number. The fast transaction system is essential to make this possible.