(I have more often heard the phrase "street smart.")
It has both positive and negative aspects. It means that the person lives in an urban environment where crime and illegal activities exist, and knows how to protect themselves, survive, and succeed in that environment.
That might be a good thing. On the other hand, a person who is "street smart" might be taking part in some illegal activities because it's just part of what you need to do in that subculture, which would be a bad thing.