Yeah, it's amazing how smooth it is. If you're moving faster than 5mph when the transition occurs, the road noise covers 100% of the ASS event. Seriously. Blindfold a passenger and they won't even be able to tell you when the engine turns on and off. Most of the times too, that's when the transitions happen.
The only time you notice the transition is when it happens at standstill, which generally is only when the air conditioning drains your battery to 7%. In that case, you hear the starter motor, feel a really faint vibration as the engine kicks in, and that's it. My passenger's reaction was "Hey, I could actually notice it that time!"
It really surprises me that BMW didn't put this sophisticated a start-stop system into the regular 328i/335i. The low voltage system in the AH3 consists of 2 12V batteries. Ordinarily they are connected together in parallel, but during starting, the car will disconnect one of the 12V batteries, use it for starting, then reconnect it. This prevents the sudden voltage dip when starting from affecting vehicle electronics.
If you pay attention to the engine starting in a 328i/335i, you can notice cabin lights and electronics dimming a bit during the start. In fact some people on this forum have reported their music volume changing / popping.