I have a fairly fancy "4k" TV that has motion smoothing which defaulted to enabled. My observations with the particular implementation in this TV are as follows:
* It was generally better for scrolling text - it made news crawlers, etc., easier to read, especially when the text was too small; this is the sort of thing they like to use as a demo in stores
* It seemed better for some modern productions but I couldn't really tell the difference for the most part
* For movies or other things with long panning motion, it was hit or miss whether it would make judder far worse - this is probably an interaction with (possibly broken) telecining in some cases but, still, it seemed to exacerbate the judder problem telecining causes
* Rapidly changing motion was just destroyed with periodic pauses, etc., which seemed like the feature was getting confused and dropping frames, especially when there was a lot of stuff moving in random directions. It seemed worst on digital effects which likely didn't have any (or much) motion blur. Before you suggest that this was due to the digital encoding of the source and not the smoothing feature, I tried the exact same footage without the motion smoothing on and it was perfectly smooth without any stutter or judder.
Basically, I ended up turning the feature off and leaving it off because it gave, on average (and ironically), a much smoother result by having it turned off.
Remember that this is with one particular implementation in one particular television. Others may be much better or substantially worse.
Perhaps a better interpolator or giving it more processing resources might help. I wonder how much of the problem is due to the upconversion that already has to happen to display a 1080p or less resolution picture on a 4k screen, or due to the motion smoothing not having enough resources to really keep up with a 4k stream.
Considering that most people don't even notice when the aspect ratio of a picture has been distorted by another dumbass default setting (stretching 4:3 footage to 16:9 by default instead of pillarboxing), I'm not surprised that people don't notice a bit of glitchiness from motion smoothing. Thought it may not be so much that people don't notice, but rather they either have no idea why things seem wrong, or they have no idea there are settings which can be changed.