Smart sensors are sensors with integrated electronics that can do one or move following functions:- Logic functions, two-way communication, make decisions. It consists of transduction element, signal conditioning electronic and controller or processor that supports some intelligence in a single package. This paper introduces concept of smart sensors and controllers systematically. The progress in the integrated circuits become possible because of the tremendous progress in semiconductor technology, resulted in the low cost microprocessor.  By designing a low cost sensor which is silicon based the overall cost of the control system can be reduced. The usefulness of silicon technology as a smart sensor, physical phenomena of conversion to electrical output using silicon sensors, characteristics of smart sensors.  The silicon sensor can produce output, as voltage, current, resistance or capacitances, output format can be analog or digital.  Suitable signal conditioning circuits along with processor can easily designed using silicon technology.  The presence of controller or processor in smart sensor has lead to corrections for different undesirable sensor characteristics which include input offset and span variations, non-linearity and cross sensitivity. As these are carried in software, no additional hardware is required and thus calibration becomes an electronic process. Reduced cost of bulk cables and connectors, cost improvement and remote diagnostics are the qualities of smart sensors. In this paper specifically laser based smart displaced sensor is explained, how smart sensors help anesthesiologist in Anaesthesia supervision is elaborated. An effort is made to demonstrate a prototype Sensor system. “Smart dishwasher controller”.  Features of smart valve controller ends this paper.