Malan endured a difficult match in the opening Test of the series at Edgbaston last week, making scores of 8 and 20 in England's two innings, as well as dropping three catches in the slips, including a crucial reprieve for Virat Kohli, India's captain, early in his first-innings century.
And Smith, who has made a number of big calls in his brief tenure, including recalls for two white-ball specialists in Jos Buttler and Adil Rashid, had suggested, in preferring the 20-year-old Surrey rookie, Ollie Pope for the Lord's Test, that Malan's game might be better suited to overseas conditions.
Speaking at Lord's during a washed-out first day, however, Smith explained in greater detail why he had dispensed with the services of a player who scored an excellent maiden Test hundred at Perth during the Ashes and seemed to have emerged from a disappointing 4-0 defeat as England's middle-order discovery.
"[Malan] has had a full calendar year of Test cricket and he knows where he is at," Smith said. "He showed with that excellent Test hundred at Perth that he can play very well on the international stage.
"Not that many people score hundreds at Perth ... not that many Englishmen have looked as comfortable at the WACA as Dawid did.
"Moving forward we talked about how his strengths could come into play, but in no way did I mean that line as an implicit criticism, he has scored over 10,000 first-class runs in England and the guy has shown he can play very well on different surfaces.
"But in an England shirt, one of the things he has done distinctively is play very well in very alien conditions so I wanted to reaffirm to him that one of the things we are looking at is having the right players for the right conditions, which is not horses for courses.
"I bridle at that sense because you wouldn't play someone who can only play well at one ground. That is not going to happen. We are not interested in going back to picking one player for one Test."
Despite his promising winter, Malan's average in England is a paltry 20.23 in eight Tests, with a top score of 65 against West Indies last summer - an innings that was carefully compiled but didn't display the same fluency that he showed in making three half-centuries in Australia, including his 140 at Perth, as well as a further fifty in New Zealand.
"With Dawid we talked it all through, the decision and his game - we played together [for Middlesex], I have seen him whack it out of the park in training - but it also is about constructive feedback to give them the best chance to come back into contention. And he remains in contention.
"Out of it all, the most important thing is that anyone in the England side should feel very comfortable approaching me and James Taylor. We are a little bit closer in age than has sometimes been the case - it's not everything - but we are around. I am aware of giving them space but if anyone wants to chat about selection, I will relish those conversations. And I have had those with selections that predate me too, guys who are looking to come back in."
The wash-out at Lord's meant that Pope, Malan's replacement, will have to wait until Friday morning to be confirmed as England's latest Test cap. MCC will have to refund up to GBP2 million in tickets through its insurance after the first full day lost to weather at the ground since 2001.