But does this move all the individual photos in the smart album or my events "folder"?
It does neither. When a photo shows up in an album it's just a pointer pointing to the original photo in the Event. So you can have the same photo in many albums, slideshows, etc. and still only have one copy of it in the library. I know of no limit to the number of photos that a smart album or any album can have.
As far as your example you would have an Event for each of the folders imported. Your event names would be like "010 - 01-02 - Kids playing at the park", "2010 - 01-12 - Samantha's piano concert", etc. If you want to create albums of each event and put it in a folder titled 2009 you can but it might be more effort that it's worth as you can do searches for titles, event names, any text, date, etc. There are many ways to you can locate a particular photo.
You can use the search by date to find photos taken on a give day, a week, or month based on the EXIF Capture Date that the digital camera adds to each photo as it's taken.
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iPhoto is a DAM (digital asset management) application that is based on a database. You can identify photos with keywords, new titles or descriptions and then search by those items like this keyword search:
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You can search for any text entered into this search box,
. It can be part of the file name, title, description, event title, album title, etc.
With iPhoto you don't manage folders anymore. Create a library, import a few folders and experiment with the various features. If you mess things up then delete the library, create a new one, import a few folders and try again.