Smoothing attempts to improve element quality by moving locations of nodes with respect to surrounding nodes and elements. The Low, Medium, or High option controls the number of smoothing iterations along with the threshold metric where the mesher will start smoothing.
Note:
When Smoothing is set to High, additional smoothing of inflation layers occurs. This may slow down the prism generation process.
For more controls on smoothing to improve quality, you can use Automatic Node Movement in Patch Conforming Tetrahedrons Method.