Because of all the stigma around smoking now, and general public health campaigns against it, smoking in a character now strikes me as being less of a "cool/rebellious" trait and more like "I don't care what happens to me" one, in the same kinda self-destructive category as excessive drinking.
I hate smoking in real life, but as a dramatic device or a prop it can be really awesome in fiction. It creates something for the character to gesture with in ways that can show all sorts of emotions; nerves, confidence, sensuality, and fills the scene with atmospheric smoke.
...But nobody smokes in my comic, because I'm in the UK and here we have very strict guidelines about depictions of smoking. Since Errant contains mostly content suitable for 13 year olds, and to do that I had to discard my love of using casual cuss words (I'm a Homestuck, this shouldn't be a surprise. In early script drafts, Rekki was dropping F-bombs all over the place while fighting demons), I wouldn't throw that away to show characters smoking.
....Even though I mean... look at Subo... that is a man who would roll a joint at ANY opportunity. Just pretend he's doing that off-screen between adventures. 
I have a smoker in my "The Last BL Comic" but it is not just because she smokes, but because it is a part of a side plot and an excuse for her to interact with the main cast.
The plot is not about smoking is bad, but about someone might die soon in the story. And the smoker never get to lit her cigarette....
I use it as a signal the character is a mess xD. It shouldn't be a problem if you don't take it as something 'cool' like they used to do (probably for advertising purpouses) on old series and movies.
I feel it also depends on the setting a little bit. In a story set in modern times close to ours, smoking could be seen as a self-destructive thing. But if you write a story that takes place in a much earlier part of history, a different setting alltogether or both, smoking could be normal.
Heck, I write a non-modern fantasy where one of my side characters smokes a pipe. Characters there do crazier stuff, I don't think anyone really bats an eye about one character smoking.
I live in an apartment with plenty of smoking neighbours. I am sick of all the smoke and I hate that they throw the cigarette buds everywhere (including on my balcony). That's why I no longer draw characters who smoke. I used to not have problems with it, but not anymore. So you may see some smoking characters in my old work, but that won't happen again in the future.
For client work I probably still would draw it though, gotta make some income right xD
I think it's kind of neat to see a smoking character because I feel like they're far and few between. At least in media I consume. I hardly ever seen people in real life smoke, too.
And I'm a sucker for smoking being associated with a character that is fed up and tired. I don't ever make my characters smoke tho. I never smoked or was around someone who did, so I don't have a mind for it. If I made a character smoke I'd forget they did later. So, they'd end up smoking one cigarette one time for some reason.
Oh! I can talk about this since I have a smoking character. For me, I just create it if it makes sense for their character. The long and short of it is don't hold back. My rule is to never hold back in creating. A smoking character trait isn't bad at all, go for it!
So I'll talk about my creation process in regards to a smoking character I made.
The character in question is Raymond Reyes of SUMMON! The Nameless Relic. I had based this character off of mentors and coworkers I've interacted with over a few years. Specifically a cook when I worked in a restaurant and a former Air Force soldier. I wanted a strong, no nonsense character that embodied the theme of "Beast-Warrior". I kept the strongest qualities of both of my inspirations: mentally and physically strong, hard-working family-man who, due to circumstances, has to fight to get his family back. The restaurant cook (and honestly half the staff) would take breaks to smoke, so I carried that trait and, design wise it worked very well. The character is super stressed and is carrying a lot on their shoulders, so they smoke to help relax. I don't intend to show it as good or bad, just a thing they do. Plus that same idea of a puff of smoke and jaded sigh was a natural fit (plus I think it's cool, health be damned).
And as for Millennial/Gen Z Anti-Smoking PSA concerns. I'm 25 myself (born 95) and I don't think twice about it. If it makes sense for the character, or you think it'll look cool, go for it!
Hopefully this helped in some way!
Many people start smoking not on purpose, but of their own volition, for example, when you get into the company of people who smoke, you are influenced and to start smoking yourself. No matter how much you don't want to start, you decide to start smoking because you were given it once, or because everyone else smokes, and in order not to stand out like everyone else, you start smoking. I for example adhering to the position of a healthy lifestyle, but with one "but", I smoke marijuana. Sometimes I get depressed and this way I relax. Having received the Medical Marijuana Card In Massachusetts, I can now buy for medical purposes, absolutely everywhere in the state.
I used to smoke but I stopped 17 years ago from one day to the other.
I sometimes smoked a cigarette here and there when I was drunk and at some point
I just stopped completely. No problem stopping, stopping to drink coffee is harder (for me)
Smoking looks cool. I hate when I have to sleep in a room where someone smoked and
I don´t like driving in cars with smokers or sit in a small room with people smoking
The characters in my comic noir stories smoke because it´s a cool effect in a black and white comic
and adds a lot to the design. The characters in the cartoony all ages comics don´t smoke.
In some ways the fact that the dangers of smoking are such common knowledge these days can make it a powerful tool for character design, because it signified so many good things in the past, but signifies so many bad things now, so the symbolic attachments to it are very complex. What I'm getting at is that smoking for a character can mean any number of things, contrasting things simaultaniously even.
For example, say you have a character that's a real macho tough guy, and a lot of kids really look up to, and you want to signal to the audience that he's a bad role model, just have him smoke. It's something that looks cool, especially to kids, but it's something they'll want to emulate and something that he shouldn't be doing around them.
I have actually written quite a few characters who smoke in various story ideas, and I've used it to mean a few different things. For example, my character Agony from my novel smokes A LOT, and at first it's just explained as something she does to rebel against her sterile background. But the more is revealed about how that background damaged her, the more apparent it is that smoking is an anxious habit for her (which it often is in real life!) and that it, along with other traits like over frequent swearing, are compulsive habits she built up to ward off the effects of that trauma.
So yeah, smoking can communicate a lot of things about a character, such as:
self loathing
self destruction
poor rolemodel
anxiety
decline
old-fashionedness
bigotry
hypocrisy
toxicity
over-seriousness
hedonism
and many many more!
As far as for replacements for smoking, have you ever thought of toothpicks? they don't sound that cool but the character Grandma Dowdel from the book "A Year Down Yonder" was that she always kept a toothpick in her mouth that she could flip it forward with her tongue to pick her teeth. When I read that as a kid I thought it was really badass and it's something about the character that has stuck with me for years. Toothpicks can be an interesting visual that can carry their own symbolism, but that symbolism is something you can invent as a writer because there isn't a cultural stigma.
(sorry for the essay but this is a really interesting topic to me)
I have no problems with fictional characters smoking, despite the fact that I myself do not smoke and, in fact, strongly dislike the smell of cigarette smoke.
If your work is not aimed at children, you should be fine.
As for in-universe smoking habits - depends on the setting, I guess. Pretty much everyone and their dog used to smoke during WWII, for example, including a lot of kids, at least in our country. Helps relieve stress, or so I'm told.
When I write my characters I don't care if they could be doing old fashioned stuff lol. There's still people that do stuff like that in the real world, so might as well just represent them. After all, they could be picking stuff like smoking from their parents or their grandparents.
I like giving smoking habits to unlikely characters.
My character Snow smokes as an attempt to keep himself from freezing to death. Yes, it's odd. No, I do not encourage smoking in real life. No, I will not give any context right now.
None of my MCs smoke. I don’t want to accidentally portray it as cool or villainise it, so I’m just not touching it.
That, and as it’s set in the Middle Ages, it wouldn’t be tobacco they’d be smoking. 
I like the idea. This adds a little charisma to your character. Have you thought of making your character vape? Imagine your character with a Nexus Smoke vape in his hand. That should look cool.
