Smart devices are no longer fashionable artefacts but have found mainstream adoption. Smart devices help humans by being context-sensitive, run errands or execute tasks and support their daily operations. This paper defines these context-sensitive smart devices (CSSD). We review the context and context sensitivity exhibited by mobile phones and smart devices. We further discuss the functionality of these smart devices and provide a functional taxonomy classification. This functional taxonomy could act as a framework in the design and development of CSSD. We illustrate the application of the functional taxonomy in different contexts, bringing out the characteristics, challenges and applications in each context.