What happens with Vector graphics that come from Illustrator?

Maybe this will help you understand what is being done.  All smarts object are not vector smart objects. Those that are vector smart object have Vector file object like .svg and .ai files.  There are no vector in Photoshop for these layers. Those object are create and update using vector applications like Adobe Illustrator.  Normally smart object layers are resize scaled via Interpolation.    The exceptions are vector smart object those the smart object have vector file object these are processed  using vector graph to render pixels for the scaled layer size. There are no vector in Photoshop for vector smart object. The vectors are in the object vector image file. The .svg or .ai file.  Photoshop does not support vector image files formats. Photoshop is a pixel editor with some vector tools. Shape layers and text layers are vector layers.  Photoshop can export vector .svg file for a shape layers. Only vector smart object layers and vector photoshop layer are scaled via vector graphics. You can Import vector file into Photoshop. However, they will be imported as a single raster layer there no vector in Photoshop for the imported image the layer is not a vector layer its an normal raster layer