The cleanup process for logs takes place each time that a site is processed.  When SmarterStats starts processing a site it will first import any new data available since the last import.  Once importing has been completed the cleanup process is started.

 

As for any older logs that might be present, SmarterStats will account for those as well and remove those files accordingly based on your current settings.  So if logs files older then 2 years are present, those will be removed automatically.  There is no need to go in manually and remove the files from the server.