No, that is not an incremental backup. It replaces the files on the backup if the source files have changed. So you can't go back and get an old version of a file. "Smart Update" is just a smart and fast image backup....
No, actually that's what incremental backups are. It backs up incrementally. What you're referring to is archiving previous versions, which is different. GGJ says it can do it, but I can't find it in the SD documentation (which is hard to navigate so no wonder).
Wikipedia's definition of incremental backup: "An incremental backup preserves data by not creating multiple copies that are based on the differences in those data: a successive copy of the data contains only that portion which has changed since the preceding copy has been created."
See? Nothing about preserving older versions, which is archiving.