Why are ISTPs so smart?

ISTPs know how to see the problem and visualize the best solution for what they are dealing with. Being someone who has an active inner mind but is also very aware of their surroundings and present in the moment, makes for an amazing combination when it comes to solving problems.

Are ISTPs the smartest sensor?

ISTPs might be the smartest (in the traditional sense) sensors, though, if that’s what you mean. Having dominant Ti is indeed something that contributes to that because Ti lends itself to big-picture impersonal analysis.