Here's my version of the usage.  I'm not claiming to be totally correct so corrections are welcome.

The essence of SMPTE gives you a relative time track for synchronization. This basically allows you to sync a device with relative ease, such as a sequencer.  Sequencers, particularly hardware one's provide this method and in this case I will use the MPC2000 with the SMPTE options as the example.

Like I already stated, the SMPTE track (I will define this in a moment) gives you absolute time in order to sync a sequencer, this means that you will be able to slave a sequencer to this, making it possible to record from a sequence multiple times.  This alone give you many possibilities of different way to record.   You can use one synthesizer as many times as you care to in the same track.  You can record each instrument on a separate track for later editing on a multitrack recorder.  You could also send your tracks (along with the SMPTE track) to a friend for remixing.

SMPTE time code numbers looks like this:  01:05:25:05   The set of numbers (01) on the left represent hours. The next set of numbers (05) represent minutes. The next set of numbers (25) represent seconds and the numbers on the right (05) represent frames per second. Without going into to much detail there are 4 basic SMPTE Time Code formats:

1. 30 frames a second (non-drop) (ref to 29.97) USA Standard 2. 30 frames a second (drop) (ref to 29.97) NTSC Standard for USA (Color Television)
3. 24 frames a second Used for motion pictures & film
4. 25 frames a second EBU Standard for European Television
On most SMPTE capable equipment you should be able to select which format to use.   The most commonly used format in music is number 1.

How to use it.  First, if you are using your computer to record, you are going to need software that is multitrack based.  This can be done in Cubase, Cakewalk and most other sequencer/recorder packages that allow you to record and playback simultaneously.  My personal favorite is Cool Edit Pro (I can't help you with the others).  It is not necessary to use a soundcard that has bunch of in's and out's.   You can do this in a single in and out on a soundcard, which you will see.  I think anyone who has a tape based system (even portable recorders) may know this info already (if not,
send me mail, but generally is the same).  Second you will need a SMPTE reader/generator like the SMPTE option for the MPC.  AFAIK, this is a hardware based item and I haven't seen a software based SMPTE generator/reader (if know otherwise let me know).  Third is just a cable that you connect between the SMPTE jacks and the soundcard.

First is to 'stripe' a track.  This is where you record the SMPTE signal to an audio track.  Connect the SMPTE OUT to the audio card in.  For this you are going to just record the SMPTE track.  Do not attempt to record audio tracks at the same time, for those of you with multiple inputs (reduces timing errors).  Set the correct BPM on the sequencer, and set any output sync option to SMPTE with the correct frame rate.   Setup up your multitrack recorder to record on the audio input in which the SMPTE is connected.  It is not necessary to monitor the signal, which you won't want to anyway since
it sounds something awful.  Check the audio input level though in the recording meter, since you will need to record somewhere between -6 and -3dB.  You may start and stop the sequencer to check levels since the signal changes when sequencer running.

Start recording on your multitrack, and wait a few seconds.  Hit play on the sequencer.  Let this run for at least longer than you will need for you song.   Much, much longer is better since you will not be able to go back and change it.   When sufficient time has elapsed (I go about 10 minutes), stop the sequencer and then stop the recorder.  If you look at the audio you should see what looks like an audio track.  You can even listen to it. Though it sounds continuous, it does change when the sequencer starts and stops.  This 'stripe' will essentially become the master clock of your entire recording session.  The sequencer will synced to this, therefore resultant tracks are too.

To use and start recording:  Switch the cable that you used to record the stripe by plugging a cable from one of the audio outs to the SMPTE IN.  (I forgot to mention that SMPTE is mono, so you should have recorded in mono) When playing back the SMPTE stripe you want the audio to go to the SMPTE in. Enable one or more of the other audio tracks to record while the stripe plays back.  Set the MPC's (sequencer) SYNC IN to receive SMPTE with the same frame rate that you recorded with (usually 30 non-drop, which shows as '30' on the MPC).   Make sure you are playing the sequencer at the same BPM (with the same BPM changes) as you recorded in the stripe.  The stripe does not contain BPM information, only absolute time.  Turn on as many sequencer tracks as you want to record.  You can even just record one track at a time to place each track on a separate audio track in your recording device.  Hit play on the sequencer (from the beginning).  On the MPC you should see 'waitng for time code'.  Start recording on the multitrack.  When the multitrack recording hits the same spot where the SMPTE track recorded the sequencer start, it will start.  If it doesn't check connections and recorded level of the stripe. At this point, the SMPTE stripe is playing 'into' the SMPTE reader and telling the sequencer to stay on time while the sequencer is putting out midi data to drive your module(s) which are sending out audio data into the soundcard in to the multitrack.  When the sequence is finished, stop everything.

You can record additional tracks by disabling the already recorded sequencer track and enabling another and repeating the above step.  Once that instrument is recorded, you are now free to use that instrument again if desired (and again, and again).    Keep the disabled sequencer track, in case you want to make changes later on and rerecord the track.  There are
shortcuts to make minor changes to audio tracks without recording the entire track again (punch in and punch out, but that's another discussion).

In a typical recording situation you monitor the actual recorded track, but if you have only a 1 in and 1 out soundcard, will have to monitor from your mixing desk (before being recorded) since the only output you have is being used to playback the SMPTE track, but this should not be a big deal.

Once done recording and saving everything, you should have the one SMPTE track and several tracks of audio synced in time.   If you want to hear the mix, mute the SMPTE track and play the audio tracks back.   You now have a song that is multitracked and ready for individual track editing and then eventual merging to a two track (stereo) song.

The stripe itself can be saved as a wave file and used on other projects. You can even prerecord a bunch of them at different BPM's to save for later use.   Just be sure to save the BPM somewhere in the title.

Additional (a bit more technical) details can be found at these links:

If you have an FSK sync device, like a 909 or MMT-8, it operates in a similar in fashion.   If you want details let me know and I will explain the differences (very few).   Maybe I'll make another page for that.