The word "elite" carries a lot of weight in the NFL, as it puts players in a different class. There is always a lot of debate on whether or not a player is elite. However, I don't think you can debate the status of Alex Smith.
The San Francisco 49ers' quarterback is by no means an elite player. However, he is playing good football and leading his team to an excellent start. There is so much more to being an elite quarterback than just wins.
An elite quarterback needs to win football games, while also putting up big numbers. Alex Smith currently sits at 24th in the NFL in passing yard totals. A lot of these numbers have to do with the 49ers offensive game plan, but that plan is also based on personnel.
It appears that Jim Harbaugh has crafted a game plan that fits his personnel. He features a run heavy offense, that uses the passing game to set up the run. Smith is basically asked to manage the game and avoid turnovers.
Elite quarterbacks are asked to win the football game, not manage them. Smith has shown throughout his career, that he doesn't have the ability to carry a football team. The more passing attempts Smith is asked to make, the more mistakes he makes.
While Smith has shown a lot of improvement, he is still far from an elite quarterback. He is proving that he is someone a team can win with, but still isn't someone who will win games on his own.
I doubt Jim Harbaugh feels that Alex Smith is an elite quarterback. However, he is trying to install some confidence in him. He knows that at some point his season he will need to lean on Alex Smith to make some big plays. So, Harbaugh is insane if he believes Alex Smith is an elite quarterback, but is right to try and install some confidence.