Originally Posted by Signum
Hit: A hit, weaker than Smash
Smash: A hit, stronger than Hit
They seem to occur at random but there might be something deeper than that.
A little add-on info, Smash usually appears when target's "head" has been hit. (you could try this out in practice field)
Also, rumor has it that Smash basically means 100% damage, while Hit means 80% or so damage; there is yet to have very accurate testing result tho.