Smoke Grenade is one of four types of equipment in CS2, alongside the flashbang, molotov, and fragmentation grenade. When thrown, it creates a dense cloud that completely blocks the view in the targeted area: neither enemies nor allies can be seen through it. The smoke dissipates after some time, but while it's up, players can't shoot through the site to see targets on the other side.
Its main use is to block sightlines from dangerous positions when taking a site, or conversely, to cover a retreat and bomb plant during a retake (an attempt to take back a site with the bomb already planted). Smoke grenades are often used together with a flashbang: first the far sightline is blocked with smoke, then the remaining enemy is flashed, and the site is taken.
Where the grenade limit came from
In a CS2 update, Valve limited the number of grenades a player can carry per round to a maximum of four. Previously, there was a loophole: a player could buy a full set of equipment right after respawning, throw a smoke grenade, and then buy an additional flashbang, ending up with more items than the round's economy (the team's total purchasing budget for a given round) should have allowed. This gave players a safety margin — if the round plan didn't work out, they could always throw in an extra grenade.
After the fix, this is no longer possible. Players now have to decide in advance what matters more at a specific site: a smoke grenade for the entry, a flashbang for the push, or a molotov in case of a retake. A mistake in equipment choice now costs more — you can no longer buy what's missing mid-round.
Why it matters
A smoke grenade isn't a one-off consumable but part of the team's tactical budget, planned alongside weapon and armor purchases. Utility lineups (pre-rehearsed spots and grenade throw trajectories) are built largely around smokes: teams memorize specific spots and throwing techniques so the smoke lands precisely on the needed point of the map and blocks exactly the sightline that's hindering the entry or the defense.