This article explains Smart Objects in Photoshop and tells the different types of smart objects & how to create, edit, and convert them.

A smart object can be identified by the little box at the lower right edge of the object in the layers panel. How can I edit the pixels of a smart object in Photoshop?

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Photoshop sandwiches ’em into a smart object, which you can open by double-clicking.

It will initially look like a regular file with a normal Photoshop artboard. On the Photoshop Layers palette, double-click the thumbnail with the smart object icon to open your smart object photo.

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To prove that your text remains unchanged, right-click on the layer name in Photoshop and choose "Edit Contents" to open the Smart Object in Illustrator.