What is Bluetooth Smart?

When the Bluetooth SIG released the Bluetooth 4.0 core specification in 2010, it came with a lot of confusion: terms like  Bluetooth 4, Bluetooth Smart, Bluetooth Smart Ready, dual mode, single mode and Bluetooth low energy where being used and mixed in the press as well as by chip vendors.

Explanations of what all of these mean, and how they work together (or don't), after the jump.