IOTA Smart Contracts Architecture
With IOTA Smart Contracts, anyone can start their own chain and define the validators.
Each chain has its own state where a state update (going from one block to the next) is hashed and published to the Tangle, which moves the state anchor on Layer 1.
The multi-chain nature of the IOTA Smart Contracts makes it a more complex implementation of smart contracts, over say Ethereum, as illustrated here:
The comprehensive overview of architectural design decisions of IOTA Smart Contracts can be found in the whitepaper.