The way that your program is written right now, you could only be using functions. Classes are a way of creating objects that work as a kind of state machine. Usually they represent some kind of resource that your program has to work with and manipulate over the course of the script. What’s helpful about classes is that they can store variables that are scoped to the class instance, and those variables can be accessible from other class functions.

For instance, you currently have activateSet, deactivateSet, saveThisSet, and isExternal. All of these take a set as an argument and do something to it. That all of these functions manipulate the same resource is a good indication that it could be better expressed as a class.

For example:

class GlyphSet(object):

  def __init__(self, set):
    self.set = set

  def activate(self):
    addSmartSet(self.set)
    # ...

  def deactivate(self):
    # perform deactivation on self.set

  def save(self):
    # perform save on self.set

  def is_external(self):
    # check if self.set is 'external'

for set in getSmartSets():
    glyph_set = GlyphSet(set)
    glyph_set.activate()
    if glyph_set.is_external():
      glyph_set.save()
    # etc...

I’d recommend reading this chapter of Learn Python the Hard Way, which details how modules and classes work and what you can use them for: http://learnpythonthehardway.org/book/ex40.html

As a general comment, your methods are pretty long. Breaking up your methods into logical chunks will help make it more readable and easier to maintain (since you can probably reuse them in other places).

Frederik will have to help you with the other technical bits. :)