When the SMCR.SM is written to '0x000', the SLEEP instruction makes the MCU enter Idle mode, stopping the CPU but allowing the Analog Comparator, Timer/Counters, Watchdog, and the interrupt system to continue operating. This sleep mode basically halts clkCPU and clkNVM, while allowing the other clocks to run.
Idle mode enables the MCU to wake up from external triggered interrupts as well as internal ones like the timer overflow. If wake-up from the Analog Comparator interrupt is not required, the Analog Comparator can be powered down by setting the ACD bit in the Analog Comparator Control and Status Register (ACSR.ACD). This will reduce power consumption in Idle mode. If the ADC is enabled , a conversion starts automatically when this mode is entered.