SMM is the official name for "unreal mode" with some more extended functionality... 386 CPUs had a hardware bug ( soon turned out to be a hardware feature

) that basically if you return to real mode without resetting segment registers to 64K, 386 continues to have older limit for the segment register and you can access upto 4GB in real mode. SMM mode is something like that, you have real mode, but over 1MB area.
SMM mode was previously used for APM ( first by 386SL CPU family, Advanced Power Management ) and BIOS's low level device, mainboard handling. If you push the power button, on older systems, SMI ( system management interrupt ) is generated and bios handles it to cut the power off in a controlled fashion. OR may be enter sleep mode and disable some devices connected to PC, and re-enable them on wake-up. OR motherboard chipset can generate the SMI to itself ( BIOS ) so that bios code handles some other lowlevel handling of the motherboard.
Upto now, it was OK, since normally you dont receive SMI. only during shutdown. and probably because PC is shutting down, you don't return from it. But lately, board manufacturers started using SMI for simulating/virtualizing non-existent hardware. How does it do it? well, if cpu tries to access let's say to PS/2 mouse ports, the chipset traps the cpu and sends an smi. the smi handler changes the SMI dump area ( reserved sections ) and simulates a return value from this port. This way you can simulate a PS/2 mouse if you have let's say another USB mouse/keyboard.
CPU enters SMM only by SMI ( system management interrupt ) which you can generate by manipulating chipset registers or by using Local APIC Interrupt Command Register with DMODE ( delivery mode ) set to SMI ( 010 ) When SMI occurs, world stops and BIOS starts to execute. OS have almost no way of masking SMI. and it won't even notice it when it does occur. ( well

not always ) Microsoft doesn't want people to use SMI for hardware virtualizing because some boards come with buggy BIOS that corrupt PCI, ACPI or USB state to handle USBtoPS/2 mouse, which confuses windows and worst case, bring it down. But well

who listens to what microsoft says
Basically, I believe, SMM is reserved by Intel for board manufacturers for hardware debugging purposes in mind. Some hardware hackers

know that you can generate really funny CPU states, like VM86 with 4GB segment limits, segment limits that are not generateable by standard 20bit plus page/byte bit segment descriptor like limit 0x12345678, 32bit port addresses, reversing port and memory accesses

by manipulating reserved area and RSM instruction. but other than that SMM has no other practical use for OS developpers.