He had already opened the original raw file via Adobe Camera Raw and converted it to a Smart Object for Photoshop. If you open a raw image (via ACR) as a Smart Object in PS, you preserve the ability to link back to the original raw and tweak the settings and re-render them back into the Smart Object within PS.
While in ACR, hold down the SHIFT key and the Open Image button will change to Open Object. Hit the Open Object button and the rendered raw image will appear in PS as a Smart Object. Now, if you double click on the Smart Object, you will reopen the image in the ACR interface where you can make changes to the raw and re-render it back to PS.
An example - let's say you have a raw you want to edit. You open it in ACR and make your slider edits and hold SHIFT to Open Object in PS. The image now comes into PS as a Smart Object. You start to make additional edits and you realize that the white balance needs to be warmer. So, you double-click the Smart Object, opening the image back up in ACR, and make your WB changes and boom - the new raw edits reappear in the Smart Object in PS. WIth all of the other PS Smart Object filter edits re-applied on top of the edited raw.
You must maintain the Smart Object as a Smart Object for this to work - if you rasterize it, the Smartness is lost.