In this theory, collapsing stars, or black holes, are always creating new universes with slightly different laws of physics. Because these laws are only slightly different, each is assumed to be like a mutation of the original universe, as if each universe was a kind of single-celled organism. It would reproduce by "splitting" in some sense.
No human can ever be part of any of these "other" universes. Observations from astrophysics can only say if the black holes exist or are common, and give some idea of how much the laws of physics can vary and still let the new universes produce new black holes.
Smolin predicts that there would be many black holes in the universe humans can see, since they are likely in a very late born universe, by simple probability. If there are many black holes, that is evidence for his theory,
As this shows, cosmology has a very different standard of evidence and burden of proof than is required for models of our universe only, which humans (using mathematics) can observe and exchange knowledge on.
It is hard to separate science from religion on such questions. It may be a simple matter of preference whether one wants to see one's universe as part of a system like biology or like mechanics - clockwork. Smolin's theory is important mostly because it challenges the mechanistic paradigm.
Even if it is wrong, it raises the idea that living beings might have to see their universe as also living to be able to understand or care about it at all. Some compare Smolin's theory to Gaia philosophy which combines biology, geology and ecology to explain the Earth, our planet, as a living thing. If both are right, humans are on a living planet in a living universe. This idea is very appealing - which does not mean it is really "right". Some think both are a kind of religion.