When you reload you just kind of slap the bottom of the SMG. It doesn't appear to have an ammo clip hanging off of it, nor does it appear to have a place that ammo would be stored inside it's casing.
Haha, that's just what I was going to say... It's on the top isn't it? At least, I seem to remember an ODST reloading it like a P90 in some video for Halo: ODST.
Halo 3 SMG, that thing with the red lights is just in front of the clip. I'm no expert on how guns work, but I always thought it was wierd how you could fire 1 bullet from the clip, reload with a whole new clip and the ammo your carrying on decreases by 1.
The clip is on the right side when looking down the barrel. vvv SMG reloading. Not straight from Halo 2 or 3 but is essentially the same. YouTube - SMG Reload
Th clip to the SMG is like a rectangular rod that sits side ways on the left side of the SMG parallel with its barrel. That allows for quick reloads and better bullet flow because of the way the bullets are packed in the clip