Smith is currently persevering with Grealish on Villa's left wing, even though by the player's own admission he prefers the "number eight" role which allows him to cover the width of the pitch.
Smith's stance has effectively led to the 24-year-old being overlooked by England manager Gareth Southgate this season.
In naming his squad last time out for the Euro 2020 qualifiers against Montenegro and Kosovo, Southgate opted not to call on Grealish due to him being "up against" Raheem Sterling, Marcus Rashford, Callum Hudson-Odoi and Jadon Sancho "in the wide areas".
Grealish would have missed those games anyway with a calf injury, but on his return against Newcastle in a 2-0 win at Villa Park on Monday night, he showed why many believe he should now be part of Southgate's squad.
With his trickery and work ethic, Grealish won free-kicks that led to both goals, ending Villa's three-match losing streak in the Premier League.
Asked after the game as to his best position, Grealish, with a smile, replied: "I don't think the manager will like me saying this, but I prefer playing as a number eight, but I'll play wherever the manager wants."
It is that attitude that so impresses Smith, who said: "He can play a number of positions.
"He can play as part of a two in midfield, play as a 10, play as an eight when we play a one and two (an attacking midfielder behind two strikers), he can play left, he can play right.
"I just feel at the moment, for the balance of the team, it (left wing) is a really good position for him. That's the thing a mature Jack knows now, that he is doing a job for the team by being there.
"I feel he gives the opposition problems when he gets on the ball and runs at them, and as we saw against Newcastle, he won two free-kicks that led to two goals."
While Smith has discussed the subject before, he is convinced Grealish has the world at his feet.
"He is in a good spot," added Smith. "If he keeps improving he can go all the way. He is playing in the top league in this country.
"People speculate about an England call-up, but all he can do is keep putting in performances like he is doing."
Newcastle boss Steve Bruce, meanwhile, was again left to mull over the paucity of his £56million strike duo in Joelinton and Allan Saint-Maximin who have scored one goal between them since their summer moves to Tyneside.
Attacking midfielder Miguel Almiron has also yet to register since his £21million switch in January, while Andy Carroll and Dwight Gayle are searching for their first goals this season, although both have been used sparingly by Bruce.
After watching his side draw a blank against Villa, Bruce said: "We have to keep persevering. It is what it is.
"Every time they don't (score), you are going to ask me the same question, week in and week out.
"They've got to stick with it, stay confident, if they can. With strikers it's all about goals, as we know, and unfortunately all of them are lacking in that department at the moment.
"We've just got to keep working away at it and hopefully it will turn."