In competitions aerobatic planes do not use smoke- it is generally used for
airshows only. Even though I don't do airshows, I have it installed on my
Extra.

Another handy use is to help other pilots find you in the pattern. It
obviously makes the plane much more visible and easy to find.

A smoke system includes a tank, pump, and orifice in the exhaust manifold.
This system allows the smoke oil to get vaporized. Smoke oil is generally
low viscosity, and makes a slimy mess on the belly of the plane as well as
the hangar floor. It is also expensive, and puts out around a gallon a
minute in my plane.

The EAA magazine will list several smoke systems for aerobatic aircraft,
while the oil itself can be purchased from a local oil distributor.