I'm not exactly sure why it would keep the smell down... it's inert.
But, it does help keep small critters to a minimum. I think that the best part is that because it is a physical agent it works whether it's wet or dry. I've used it to dust for lice on my chickens, but when you have a lot of birds it is a lot of work, and you can't avoid inhaling it without a mask. There are other natural powders out there that work as insecticides, and the Stall-Dri does work to keep the moisture down, though I've not had very good luck with it this year. I have also used the lime in my dropping pits to keep the ammonia down, since it was enclosed and the birds couldn't step in it. Now I have a dropping board under the roosts covered with vinyl... I just scrape off the droppings each day and it keeps the coop drier and cleaner. Well, it does when all 30 of them aren't locked up inside because of the cold...