For additional details on this, Google for the terms "SMD vs NSMD".
In this case, the acronyms stand for "Solder Mask Defined" and "Non-Solder Mask Defined" pads.
In SMD, the mask opening is smaller than the actual copper pad, so the solderable area is defined by the mask. This is used on some BGAs for increased bond strength between the copper and the substrate.
In NSMD, the mask opening is larger than the copper pad, so it is the copper pad itself that defines the solderable area. This is used nearly everywhere else (and it is the default in Eagle), because it makes it easier to get a flat finished surface. Also, the copper area is slightly smaller, making it easer to route traces between pads.