This is just something I took off of a forum
"Back-UPS is whats called an "offline" UPS - it means that its not doing anything much until theres a powercut - when the mains fails, a relay closes, the rectifier based battery charger reverses to become a basic squarewave inverter that creates a pseudo-sinewave output running from battery power to supply your computer.

Pro:
cheap battery backup.

Con:
minimal protection from spikes & power transmitted RFI.
no protection from brownouts or surges
50-100ms break in power during the switch between mains and battery

Smart-UPS uses "line-interactive" technology - it still means there is a relay in the circuit, so you still get a small break in power supply, but a Smart-UPS also incorporates a transformer that gives additional filtering for mains interference such as spikes & RFI, and it also can give boost/reduce by automatically tapping or removing another coil on the transformer to reduce the impact of brownouts or surges. They also give a sinewave output rather than squarewave.

Smart-UPS is by far the better choice of the two, but if you want full protection, you need to check out APC's "online" type UPS. More expensive, but they synthetically regenerate the mains sinewave giving you total isolation."

"Smart" is a way used by manufacturers to differentiate among product lines. In the APC case, both of them, the Back-UPS and the Smart lines ares Off-Line models (line interactive is a fancy way of saying "more expensive off-line"). Both of them offer voltage regulators and line filtering. The difference between them is the output waveform in back-up mode; Back-UPS use a PWM waveform while Smart units use a sinewave one (both of them are generated by PWM circuitry, but Smart line have different circuitry and more filter in it). Among this, Smart units, in the APC world, have better communication capabilities and more programing flexibility.
Now comes the problem. APC Back-UPS and Smart products should not be used with back-up generators because the frequency drift produced in them by load changes. Besides that, generator's distortion is, often, too big for those UPS to handle and this and the frequency problem just mentioned could couse the UPS to switch to back-up mode (running from batteries) too often and, of course, shout down the load sooner or later. You could try it, many people mix off-line units and back-up generators, but I don't.
  

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Joe
Electro-mechanic Engineering
jpm@ieee.org