It scrolls smoothly, it doesn't snap line by line. Although once the scroll animation is complete the final positions of lines and columns do end up aligned to a grid.

Neovim (as opposed to Vim) is not limited to terminal rendering. It's designed to be a UI-agnostic backend. It happens that the default frontend runs in a terminal.

It explains most of this on the features page of the site.

It's pretty snappy even on lower spec machines. I didn't notice any issues with scroll snapping.