Look at his shot chart I posted above Dazz, it explains his value to this team.
It's addition by subtraction.
The problem is:
1). Smith can't play small forward in 2014. The defenses are all too good and if you can't stretch the floor you will lose a tonne of games, unless you are a truly elite defensive team, and the Pistons have been ATROCIOUS defensively when the Smith/Monroe/Drummond frontcourt shares the floor together. Monroe and Drummond both can't shoot either, so you're offense is clogged. In fact, no one on this team can shoot, so it makes Smith seem even worse than he is. Clogginess aside, Smith loves hurling up three pointers and long twos, despite not being able to shoot, so it's directly inefficient before you even get to the indirect flow-on spacing stuff.
2). Smith can't play starting power forward for this team because Greg Monroe is better than him
3). You can't bring Smith off the bench because you'll lose him mentally.
So you have to get rid of him, but he's super overpaid and people want picks to take his contract. You can't give up picks because you're a rebuilding team, so you waive him. Super dumb teams like Sacramento or Brooklyn