Opening images as smart objects

It has to do with how Smart Objects layers are processed. Photoshop renders pixels for the layer's smart object and uses these pixels as the layers content.  These pixels can not be change with Photoshop tools they can only be worked on for the layers composite view like you can add smart filers like a blur the layers rendered pixels are not changed but  they are blurred into the document image composite view.  If you turn off the visibility of all the other layers it will look like the layer's pixels have been blurred  But you wiil see they have not if you turn the visibility of the smart filter off.   All smart object layers also have and associated transform,  The actual object may be a different size then the pixels you see in the documents composite image view.  Use Ctrl+T the layer may be larger than canvas size and being clipped the the document canvas size.

You can not use tools like Paint brushes to change some pixels or delete some pixels  with an eraser or a selection cut.  You can blend the layer by changing the layers blending mode.  You can not blend anything into the pixels the have been  rendered by Photoshop for use as the layers content.  The Object's content they can only be changed by opening the Object and working on the object and committing changes.  Photoshop will then update the smart object and render a new set of pixels for the updated object.

You should be able to do some things, such as transform. You won’t be able to use the brush tool, for instance, directly on the layer. If you need to directly edit the layer, duplicate and rasterize. Otherwise, do as much as possible with new, empty layers and adjustment layers, etc. so they are non-destructive.