There's actually a lot going on behind the scenes to make Smart Reply work. Inbox uses machine learning to recognize emails that need responses and to generate the natural language responses on the fly. If you're interested in how Smart Reply works, including how researchers got machine learning to work on a data set that they never saw, you can read more about it on the Google Research Blog.
And much like how Inbox gets better when you report spam, the responses you choose (or don't choose!) help improve future suggestions. For example, when Smart Reply was tested at Google, a common suggestion in the workplace was "I love you." Thanks to Googler feedback, Smart Reply is now SFW :)
Smart Reply will be rolling out later this week on both Google Play and the App Store in English. If you've got a lot of emails on your plate, now's a great time to try Inbox and get through them faster than ever.