I don't know what you mean by "smoke and mirrors,"
Others covered this a bit already, but some of the things the AI do aren't that clever, but are given the impression of being clever via the callout system, marketing, and reputation. It's still good, but the reputation is way overblown.
To give a couple of examples. "OMG! The enemy tries to flank you!" As
@Edgy But Dull said, the AI will try to move to a random spot behind the player. This is "dumb" behaviour but having the leader say "try to flank him" makes the player think this is genius. It not uncommon to have a guy run around a window to your side, then dive through the window the wrong way. In any other game, this would be condemned as dumb AI, but because the player has been primed to think of the AI as amazing, they'll fill in the blanks and say "he jumped through the window to get into cover!"
For the time it's incredible work but rather basic compared for today, makes it a much greater shame that no modern FPS tries to replicate it. The AI not the 90% office buildings and turrets
Other games have similar behaviour. A mod that replaced the Half-Life 2 Combine voices with plain English is great for this. They also try to flank, will call out locations, throw grenades when the player hides in cover. It gets little credit however because combine use surgery terms, like "clamp, cauterize, sterilize." When you kill a squad of combine quickly, the lone survivor with run away to cover, firing wildly while screaming "Outbreak outbreak outbreak!".
I don't remember if Fear 2 and 3 use the same AI, but because people don't like those games as much, they don't get credit.
I want to say the Batman Arkham games have complex AI for their stealth sections, but it gets no credit either. Again, could be wrong.
The problem is that "smart" AI doesn't mean "good" AI. Games like Doom and Mario don't benefit from enemies being clever. Iirc there was a Transformers game that used FEARs AI system, but then ditched it for the sequel because it was costing a lot of performance for little gameplay gain. Sometimes there's even work put in to make AI stupid for the purpose of fun gameplay. This is why snipers in games often use laser sights or sit in tall buildings when it doesn't make sense too, because walking along, falling down dead, then hearing the gunshot 3 seconds later doesn't make for fun gameplay. Many good stealth games don't have guards that turn 180 unless something makes them, so that the player can sneak up behind them for a take down.