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!