Yes, a 'feeling of being aware' is a good way to put it.
I think it's used because we often become aware of the thing to which a particular smell is associated before we become conscious of the smell itself. Instead of thinking "that's salt water" we think "we're getting near the ocean", or "there's a bakery nearby" instead of "I smell hot bread". We aren't used to putting smells at the fore of our consciousness, but it still works "in the background", so to speak, and so we have expressions indicating that we think we perceive something without visual or audio evidence of it.
EDIT: I just realized, also, that I often don't know exactly what the smell is, only its association. I can't tell you if the smell is hot bread, or hot yeast, or some other product of a bakery, I can just tell you that I associate that smell with an operating bakery.