The smell of sweetgrass is coumarin, the same compound that gives new-mown hay, tonka bean and woodruff their scent. It is not present in the living plant in that form: the grass carries a glycoside that releases coumarin as the tissue dries and the cells break down, which is why a fresh blade smells of very little and a cured braid smells strongly.
That is a general rule for hay-scented plants and it explains a practical feature of the ritual material. Sweetgrass has to be dried properly to work at all, and a badly cured braid is disappointing rather than merely weaker.
Coumarin is also why the plant has a regulatory history. It is restricted as a food additive in several jurisdictions on liver toxicity grounds, which affects the flavouring trade rather than the ceremonial one. Zubrowka, the Polish bison grass vodka, is flavoured with a close relative of sweetgrass and is sold in the United States only in a version with the coumarin removed.
Hierochloe means holy grass, which is a translation of the older European name. The plant's northern European populations were strewn before church doors on saints' days in parts of Scandinavia and the Baltic, which is a use entirely independent of the North American one and is much less well known.