Liquid smoke is a seasoning ingredient usually used in marinades for cuts of meat that benefit from smoky, mesquite accents. It comes in different flavors, which is meant to suit different types of meat (applewood for ham and hickory for pulled pork, for example).
The product is developed by gently smoldering popular barbequing woods in a type of large oven. The smoke and the water vapor combine and are then chilled rapidly by a refrigeration unit so that the water molecules carrying the smoke condense into liquid.
The liquid smoke is then piped into oak barrels to age, and after the aging process, it is filtered and bottled for sale.
Because liquid smoke flavor is so strong, only a few drops are normally used at a time, and they are typically added to marinades and not the meat itself.