As in the original German, its use in Yiddish as a noun can designate a range of types of unpleasant substances from any kind of soil such as mud or dust to thick or ground-in dirt such as soot or grass stains. More strongly, and less accurately, it's used to indicate a particularly foul or repulsive matter such as animal waste or the fuzzy stuff found growing in the jar way at the back of the fridge. A Jewish comic once raised schmutz to the exalted status of “dirt that moves.” As a verb, it can be used literally to describe an action as in, “Five minutes into the party and she schmutzes on herself already,” or it can move into a figurative indication of messing up things in general as in, “I don’t need you to come in here and schmutz things up for me.” Its adjectival form is schmutzic (also shmutsik) and means dirty or soiled as in, “He dropped his blintz and got his shirt all schmutzic.”
Schmutz is in no way related to or interchangeable with either weiner schmaltz or schmuck. Nor is it any kind of dreck which should be reserved for garbage in the sense of being poorly made, worthless, or simply crap. It is also not chazeray which is junk in disarray.