The evolution of Artificial Intelligence (AI) has significantly transformed the landscape of smart home systems into a new era of convenience, efficiency, and personalized experiences. This paper provides an insightful exploration into the historical progression and contemporary developments of AI within smart home environments. Beginning with an overview of early automation technologies, we trace the evolutionary trajectory of AI's integration into smart homes, highlighting key milestones, breakthroughs, and paradigm shifts. Moreover, this paper also highlights the applications of AI in smart home ecosystems, including home automation, energy management, security surveillance, healthcare monitoring, and personalized assistance. Through advanced sensor technologies, ubiquitous connectivity, and cloud-based computing, AI-enabled smart home platforms offer seamless integration, interoperability, and scalability, paving the way for a more interconnected and intelligent living environment. Furthermore, we discuss the emerging trends and future directions shaping the evolution of AI in smart home systems. We also address the associated challenges and considerations, including privacy concerns, data security risks, ethical implications, and regulatory frameworks, which warrant careful attention and mitigation strategies.