If you are wanting to block an IP Address or an IP Range, you would go to SECURITY > BLACKLIST to enter addresses you want blocked. Smartermail will not respond to these IP Addresses (and as of version 12 will log that an attempted connection was made).
If you want to block an Email Address, Domain, or EHLO you would go to SECURITY > ADVANCED SETTINGS > SMTP BLOCKING. You can either enter the specific address, domain, or EHLO in the "Blocked Address" field. You can use wildcards in the "Blocked Address" field giving you the ability to block common email address contents (i.e., *.in to block all domains using the India .tld). Smartermail will give a "Sender Not Allowed" response once the EHLO or Message From is received from the connecting server, and then hang up the connection.