What's a smooth neighborhood? Why can it result from a transition map?

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What's a smooth neighborhood? Why can it result from a transition map?

Particularly I found this in a proof for the maximal atlas being smooth. Here one constructs a composition of two transition maps, but then it's said that the composition is "a smooth neighborhood of $x \in \mathbb{R}^n$ (which was shown earlier)".

But I wonder, how does this definition make sense.

I've thought neighborhoods are sets, but smoothness is a property of functions.

So how can one have smooth neighborhoods?

Maybe it tries to say that the image is a neighborhood of $x$, but the structure in hand is also a smooth structure.