The Index is an intermediate cache for preparing a commit. With SmartGit, you can make heavy use of the Index, or ignore its presence completely - it's all up to you.
The Stage command allows you to save a file's content from your working tree in the Index. If you stage a file that was previously version-controlled, but is now missing in the working tree, it will be marked for removal. Explicitly using the Remove command has the same effect, as you may be accustomed to from SVN. If you select a file that has Index changes, invoking Commit will give you the option to commit all staged changes.
If you have staged some file changes and later modified the working tree file again, you can use the Discard command to either revert the working tree file content to the staged changes stored in the Index, or to the file content stored in the repository (HEAD).
When unstaging previously staged changes, the staged changes will be moved back to the working tree, if the latter hasn't been modified in the meantime, otherwise the staged changes will be lost. In either case, the Index will be reverted to the HEAD file content.
The Changes view of the SmartGit main window can show the changes between the HEAD and the Index, or between the Index and the working tree state of the selected file. You can switch between both views either by clicking the left HEAD button or the right Working Tree button. The detected and expected line separators are shown in the Changes view title. Individual change hunks or inner-line changes can be staged and unstaged there (if the line separators are not mixed).
The Index Editor shows a 3-pane-view of HEAD, Index and the Working Tree. The Index and the Working Tree state of a file can be edited freely, e.g. to add further modifications to the Index which are not available in the Working Tree.