
Jenny B. answered 08/11/19
Experienced and Caring Reading, Writing, and Grammar Tutor
I would deduce that, in your example, "smiling" is a nonfinite verb, similar to your example of "Joe ran from Melissa, smiling as he went," in that "those two" are the ones smiling. It is not an adjective because, in the grammatical sentence, it is not describing "those two" ("Look at those two smiling people over there"), and it is not part an adverbial phrase because it's not modifying the verb in the sentence ("look"), but it is being used to describe what those two are doing, and as such, would be a nonfinite verb. I hope this helps!