What I want to know is how to set up a project plan so that a resource is assigned for 2 weeks but is only having to do 40 hours of work over those 2 weeks. Is that the % Allocation?
Yes the % allocation would be used for this. If they work 40 hour weeks and they are spending half their time on a task for two weeks, the allocation would be 50%.
http://help.smartsheet.com/customer/en/portal/articles/1346969-resource-management-allocation-team-enterprise-only-