$security can be TRUE or FALSE, defaults to FALSE. Security is good for situations when you have untrusted parties editing the templates eg via ftp, and you want to reduce the risk of system security compromises through the template language. Turning on security enforces the following rules to the template language, unless specifially overridden with $security_settings:
If $php_handling is set to SMARTY_PHP_ALLOW, this is implicitly changed to SMARTY_PHP_PASSTHRU
PHP functions are not allowed in {if} statements, except those specified in the $security_settings
Templates can only be included from directories listed in the $secure_dir array
Local files can only be fetched from directories listed in the $secure_dir array using {fetch}
{php}{/php} tags are not allowed
PHP functions are not allowed as modifiers, except those specified in the $security_settings