Surface smoothing is required for reconstructing a continuous surface mesh from discrete samples stored in a labelmap volume. This smoothing does not remove any details from the segmentation. If you set surface smoothing to 0 then you will see the discrete samples instead of the reconstructed surface (each voxel of the labelmap will appear as a cube).
Smoothing effect is for removing irrelevant details (i.e., surface noise, speckled, small holes) from the segmentation.