General Discussion

.... does not know which client you may be using: web, outlook, Thunderbird, etc. And you can mix and match. So it performs the same processing on incoming and outgoing emails regardless of which client you may be using.

The outlook and the thunderbird clients communicate to the sever through a standard protocol called IMAP. IMAP is a universal standard so it does not support proprietary "smart" features. The browser interface, however, runs on Google's servers and is adjacent to the email server. Because it is "inside the box" it does not need to use a standard protocol and can support the "smart features." However, the email server will process the emails in the same way, regardless.

It seems like Google is saying that if you turn off the "smart" features, then the "smart" processing is not done. This would make sense, but it could be that they just suppress the smart features without actually stopping the smart processing. As far as the browser user would know, it's all back to being dumb. But the absence of the smart features does not necessarily mean that the processing behind the scenes has changed.