Smith is a beginner level blacksmith that he meets before Khan. With Smith, he learns the basics of controlling fire, chopping wood, and making arrows. When he makes the special arrows that get the interest of the Tza-something guild, he "graduates" and moves to a bigger town, where he then meets Khan.
Smith is left behind because he starts giving off fanboy/love vibes to Grid; he is the one that starts out the running gag of only old men liking him. Too much overlap with Khan is probably why they made a new character to replace him.