Smart Object - Cropping on a Layer via Select- Inverse- Backspace

OK, I have learned that you can't "Crop" on a layer, but instead should use the Select->Inverse->Backspace procedure to essentially "crop" a photo.  But this procedure does not work on a Smart Object photo.
I have also found out that if you Simplify the Smart Object, the above cropping procedure works.
So now I need some help on understanding what I lose when I go from a Smart Object to a Simplified Object.  It appears that I can still resize, rotate, etc. the photo, so what am I missing.

Michel- I guess everything is not as good as I thought.  I guess I mis-read the "Copy to Layer" (cropped) image as still being a Smart Object (when my wife did it), but this morning when I repeated the procedure, I ended up with a Simplified cropped image.
So the effect is the same -- i.e. either way you end up with a Simplified cropped image (whether you do a Layer->Simplify Layer and then do a Select->Inverse->Backspace  OR  you merely outline the area you want cropped with the rectangle and then do a "Copy from Layer).
And even I can see if I want to do any significant resizing (enlarging that is), I need to be working with a Smart Object because the Simplified start pixilating very quickly when enlarged.
I also think I finally figured what the little boxes in the lower right corner of the Layer palette icon is -- it indicates Smart Object, right.  I didn't see that explained anywhere.  Also, more education is needed in the Help Documentation about Smart Objects.  Thanks for your initial response -- and these forums are life savers.

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