What exactly does this expression mean? What situation would you say this? Have you ever used this expression?

It's a magician's term. Smoke is used as a "cover" and a diversion to keep the audience from seeing what the magician was doing to set up a trick. Tricks are also done with the clever placement of mirrors. For example there is a prop called a mirror table...to look at it you would see what appeared to be a normal table with four legs. In reality, from the underside of the table top to the floor there would be stratigically placed mirrors. This allowed for the audience to think they were seeing under the table when in reality they were seeing a forced image.

To use the term "smoke and mirrors" in everyday language would elude that something was fake or the truth was being hidden. And yes, I use that term quite often. When people comment me on my appearance I will say "thanks but it's all done with smoke and mirrors"

You're too funny!

Thanks.