SmartMedia, like its successor xD, is a raw NAND format — it's just flash memory chips, and the device is responsible for all the intelligence. In theory, this means the cards can be cheaper and the more advanced processors in cameras or card readers can manage the flash better than the tiny ones fit into other types of cards.
In reality, economies of scale meant the prices never came down to be competitive with other types, and the disadvantages of leaving the cards themselves to be dumb (yes, the name is ironic) shine through:
- Every device needs to be updated to support newer, larger formats. As you know, your camera topped out at 64MB, and even though 128MB SmartMedia cards were made, without a firmware update made to support the new sizes, you can't use them.
- Because the interface is at a lower level, it's easy to accidentally corrupt the whole card without even writing to it.
So, that was a big market flop.
Compact Flash, on the other hand, uses an interface which uses the same IDE interface as hard drives. There's a tiny little "drive controller" built into each card. That means the limits are the same ones that limit computers from using larger hard drive types: sector/cylinder math barriers (which may limit the card to 2GB), and filesystem limits (which, largely by coincidence, may impose the same 2GB limit).
It is incredibly likely that a camera of that vintage (see also this recent question) is bound by one of those limits, making 2GB the top. It's possible but unlikely that something obscure will limit you to 1GB. I know for sure that it'll support up to 1GB, because for a while, Fujifilm bundled a 1GB microdrive with the camera as a promotion.