Instead of opening the jpeg file first and then converting to a smart object, Do File>Open As>Camera Raw and when your done with processing the jpeg in camera raw press shift and then press Open Object.

Then double clicking on the smart object will open it back in camera raw.

It looks like all the files he's using are camera raw files and the one he double clicks had already been opened as a smart object.

I'm sure it not any layer the layer would most likely be a Jpeg or Tiff file and the users ACR preferences would also be set to open Jpeg and Tif files in ACR.  I sure if you read or view his documentation you will find that the embeded object is a Jpeg or Tiff file not a raster layer.

JJMack might have been referring to the script and video that is on the script page i linked to.

R_Kelly wrote:

 

JJMack might have been referring to the script and video that is on the script page i linked to.

I did not know about the script. I just knew that ACR can only work on Camera RAw Files and convert the camera sensor RAW data into RGB Images and use setting other then ones set into the camera,  ACR can also process Jpeg and Tiff files however Camers Sensor RAW data for thes images nolonger exists in the file. So ACR can not work on the images as well as it can when it has access to the Camera RAW data. 

I was somewhat wrong about not being able to edit normal layers in ACR this script sort of makes that posible. What it does is save information about the layers transparenct and layer mask save out the layer as a temp Tiff file and place it back in as a smart object and restor the best it can any layer mask and transparency.  You preferences must be set to open Tiff in ACR. While I was somewhat wrong I was bassicly right. The script turns the layer into a Temp Tiff file and places it back in the document as a smart object layer the embedded object is a Tiff file.  The temp Tiff file is nolonger needed for the smart object layer has a copy of it in its embedded object.