Need help trying to wrap my head around smart contracts

Sorry if I sound clueless and I may not be understanding the core feature or purpose of ethereum, but I have an idea that I believe smart contracts would be useful for

Let's say I want something delivered but the time frame for delivery is open ended. I put some ether up front, thats my payment so to speak. Does it just hang there in digital escrow indefinitely? If the delivery is never made, is that ether presumed lost? How does a real world action translate provably into the fulfillment of a contract? To better encapsule these questions, my idea is for a digital bounty system whereby cyber crime can be resolved by awarding crypto. An example might be, some one has their wallet hacked, and they promise to award a portion of its contents to whomever leads to its recovery. I imagine such a bounty system wouldn't necessarily have to involve crypto, but a provision of information in general.