Like a capacitor blew. It could be a power supply, but less likely. Power supply would have been more smoke and the potential of fire. Capacitor would be a small puff of smoke.

Take it into a repair place. They’ll need to see which capacitor and if ti can be replaced.

Did it look like this?
https://www.youtube.com/watch?v=DPGmT7svpY0

With most Apple hardware (basically, anything from the last decade except the Mac Pro), the hermaphroditically sealed enclosure makes it far easier to take it to the dealer than to even diagnose hardware problems, let alone do anything about them. No matter what the issue is, there are no user-serviceable parts inside an iMac unless you have not only enough computer skill that you would not be asking this question in the first place, but the dexterity of a brain surgeon and (depending on the generation) special tools that are normally only legally sold to Apple dealers.

While I have built many systems over the last few decades and spent time as an electrician, I would take advantage of Apple’s industry-leading customer service and leave it to them. I may not be a fan of their software or their pricing, but even I admire the competence and courtesy of their support staff.

A little looking of my own showed that smoking iMacs are common, but the causes vary enough that even if you could get in there, I would not be confident telling you exactly what went out without seeing the computer for myself anyways. Odds are that it is the power supply as that was the culprit in about half the cases I read about, but I am not sure enough on that to spend money on that guess; I would advise that you don’t either.

Thanks for your time guys!

@elbanditoroso I took it into repair, they didn’t open it and said it was “likely the power supply”. They don’t sell power supplies for my iMac anymore (they even called it vintage), which is why I took it home and decided to do it on my own.

@osoraro Yes, not as much smoke, but it came out from the bottom as well.

@jerv I agree with you, but I am also not a fan of their pricing. I looked at this page on ifixit.com website: https://www.ifixit.com/Store/Mac/iMac-Intel-20-Inch-2-2-4-EMC-No-2133-GHz-Power-Supply/IF168-004-1#productDescription
and not only do they sell the required tools to replace the power supply, but they also show you how to do it. However, if I’m not 100% sure that the culprit is the power supply, I don’t feel comfortable in investing 140$ in it.

I buy many parts from used computer places; we have quite a few around the Seattle area. Do you have anything like that near you? I think I could get a complete, working “vintage” iMac for $140, so the pricing is definitely more reasonable than Apple would ever consider dreaming of.

@jerv Unfortunately there’s no place near me where I can buy computer parts for an “old” iMac such as mine…