Smelting is a child skill of Mining and Repair. The effective Smelting level is the average of the parent skill levels.
Fuel Efficiency is a passive ability of Smelting that makes the burn time of fuel in a furnace extend. Each level increases the efficiency multiplier by about 0.04. For example, Fuel Efficiency reaches 4x at level 1000.
This ability will grant a second piece of whatever you're smelting, whether it be logs to charcoal, iron ore to iron, and even gold ore to gold. The chance of the player doing a second smelt increases 0.1% per Smelting level. At level 1000, you have a 100% chance of getting a second smelt.
Vanilla XP Boost
The Vanilla XP Boost ability is a passive, like all Smelting abilities are, that grants more experience from a furnace when you smelt materials or ores such as iron ore, oak logs, and sand. The more levels you increase in the smelting skill, the more experience you will gain when you smelt something in a furnace. Like all abilities, Vanilla XP Boost caps at 1000 levels.
Smelting a full durability pickaxe in a furnace gives a Flux Pickaxe of that type. For example smelting a diamond pickaxe you would get a diamond pickaxe called 'Flux Pickaxe'. If you are at mining level 250+ you have an approx. 33% chance of instantly smelting ore you break. This action is followed with particle effects.