My question is where does boil off and cooling shrinkage come in? It does not appear to be accounted for.
Efficiency is about sugar content, not water. As boil off occurs, there is a corresponding rise in gravity because sugar isn't lost. Shrinkage isn't concentrating sugars, evaporation is.
Your Brewhouse (total) efficiency is the percentage of total available sugar (locked in the grain) that makes it to the
fermenter. If you put your
brewhouse efficiency at 90%, you're saying that with mash efficiency and all accumulated losses, 90% of the
total available sugar gets into the fermenter.
As you increase your loss to trub in the equipment profile, you'll see a corresponding rise or fall in mash efficiency. The predicted gravity won't change because BeerSmith is using Brewhouse efficiency to predict it. So, with more loss, the total available sugar can only come from an increase in mash efficiency.