It's all speculation, etc etc, but my thinking is, if we really are shopping Smart, it's because Danny thinks Smart has a lower ceiling than we might have initially believed, and is hoping to flip him to a team that sees more potential there, ideally as part of a package that lands a better talent.
Not so much considering him a "mistake" as believing there's a gap between his actual value and perceived value around the league that may close if we don't move him soon.