DIAGNOSIS That's the upper quartz heating element and its protective guard. The black coating is carbonized grease and food splatter that's burning off during preheat, causing the smoke and sometimes a bad smell.
FIX It needs a deep clean, but you must be gentle. The element is fragile. 1) Unplug the oven and let it cool completely. 2) Use a damp microfiber cloth or sponge to wipe the entire interior, including that top area, with warm, soapy water. 3) For the stubborn carbon on the element guard, make a thick paste of baking soda and water. 4) Wearing a glove, carefully apply the paste to the guard, avoiding direct contact with the quartz tubes themselves. Let it sit for 20 minutes. 5) Wipe clean with a damp cloth. Do not scrub the quartz tubes.
IF THAT DIDN'T WORK For persistent, baked-on carbon, you can use a dedicated grill cleaner or oven cleaner labeled safe for self-cleaning ovens. Spray it on a cloth first, not directly into the oven, and then carefully wipe the guard. Follow the cleaner's instructions for rinse and ventilation.
HEADS UP To prevent this, always use a drip tray or the provided pizza pan/air fry basket when cooking fatty foods like bacon, sausages, or burgers. The guard gets dirty from splatter bouncing off the top of your food.