Spell Monsters are a type of Continuous Spell Card that is Special Summoned as a Monster Card after it is activated.
All of these cards are treated as both Monster Cards and Spell Cards while they are summoned to the field, and as such, take up both a Monster Card Zone and a Spell & Trap Card Zone at the same time.
Spell Monsters cannot be activated on your opponent's turn, making them unable to perform the "Emergency" Defense that Trap Monsters can. They can instead provide an immediate source of Tribute Fodder, much like some cards do already, like "Fiend's Sanctuary".
As shown in Yu-Gi-Oh! GX they can be used as Fusion Material, as Jaden was able to fuse his "Elemental HERO Neos" with "The Rival's Name" (which was being treated as "Rainbow Dragon") to create "Rainbow Neos".
In Yu-Gi-Oh! ZEXAL, they are shown to be able to be used as Xyz Material, with Fortuno overlaying "Xyz Plant" with "Rainbow Shaman" to Summon "Number 11: Big Eye".
In Yu-Gi-Oh! ARC-V, they are shown to be able to be used as Xyz Material, with Yuto overlaying two copies of "The Phantom Knights of Shadow Veil" to Summon "Dark Rebellion Xyz Dragon".