saw a sign that said "smog test" how does one test for smog?

They are looking at the constituents of the exhaust gas stream, to see if some of them contribute to photochemical smog. Such things as unburned fuel (VOCs), and excess amounts of NOx.

Actually it has been wrong forever. Smog forms in air when combustion components, fog and ozone react with sunlight. Smog does not come out of engines, but some of the smog forming agents do. The test is actually to determine how much of these components are being emitted from the tailpipe with a probe that analyses the exhaust for CO, unburned HC, and CO2 .

Generally, they stick a gas analyzer probe in the exhaust pipe, while running the engine under load on a chassis dynomometer. The measured values are compared against government standard values for a pass or fail result.