Hi Borkan, nice to have you here :)
Smoothing is as it sounds - how much the finished map is smoothed before contouring. A low value will make the map look more "jagged", especially in the 3D view and for maps with a low density of data. Higher smoothing values help to remove this jagged appearance, but will also erode some finer level details. I would say that it is a matter of preference, and as a general rule the higher density of data that you have, the less smoothing you will want.
The contour grid resolution is the size, in metres, of the grid cells that we sample the data to before we begin the contouring process. Lower values can give higher resolution finished contours, with more detail - if the source data is there to support it. The downside is that contouring is an expensive process and small cell sizes produce a lot more data to process than large cell sizes (e.g. a 1m grid will have 25x as much data as a 5m grid).
Smoothing works exactly the same way on the bottom hardness grid as it does on the bathymetry data. The number of contours for BC specifies how many contour levels to create. The higher the value, the more distinct hardness areas are generated.
I am not sure what you are asking in your last question. It does look to me like you have a track in that project that has not been properly adjusted for the water level. Note the 5 or 6 distinct "holes" in a line heading up from your reef. Is that real structure, or is it an effect from a track that has not been aligned properly with the other tracks? Take a look in the define map view of the project and it should be clear if that track is at a very different depth to the surrounding data. You can right click a track-point in there and adjust the water level up or down using a slider, until it fits better. Either that, or use tide offsetting if you already know the values.
Matt
