Moeen was left out of England's last five-day assignment, a draw with New Zealand in Christchurch, with Somerset's Jack Leach called up for a debut in his stead.
And there was no place for Moeen in the 12-man squad for the upcoming two-match series against Pakistan, which was released on Tuesday.
A broken thumb has ruled Leach out, prompting England to call up his uncapped county team-mate Dom Bess, while Moeen has been limited to a bit-part role with Royal Challengers Bangalore in the Indian Premier League.
"I don't think anyone doubts Moeen's ability to contribute handsomely to cricket matches, particularly in England, where he has a strong record," said Smith of a man who has five hundreds and four five-wicket hauls in Tests.
"It was just a sense that we've moved away from the idea of Moeen playing as a first spinner. That was something that the group has moved away from.
"And therefore to bring him back before he's had a chance to, if you like, address things that he's been working on didn't feel right, so the opportunity came up for Bess.
"Moeen Ali - we know he's a very dangerous player, we know he can play a major part in winning games with bat and ball, but right now, after a difficult winter for him in the Test arena, it didn't feel like the right time to bring him back into the squad."
“Buttler is a dynamic, unique player and Bess has grabbed every opportunity he’s been given”
There was, however, a recall for Jos Buttler, who has not played a Test since December 2016 but has been in superb form in the IPL, equalling the tournament record by making five consecutive fifties for Rajasthan Royals.
Buttler is set to bat at seven, with captain Joe Root moving up to three to replace the dropped James Vince while Dawid Malan, Jonny Bairstow and Ben Stokes will comprise the middle order.
"With Ben Stokes obviously an established and outstanding number six and also balancing the team as a fifth bowler, that created a possibility for a different look at the number seven position," added Smith.
"Who could do that job in a way that was unique, in a way that really brought a different dimension to the whole batting order? And the panel decided that Jos Buttler fitted that bill perfectly.
"The message to Jos from everyone around the table was to play his way, to play with the confidence and the flair that he's capable of batting with and the skill and the decision making.
"He's become such a complete cricketer in the white-ball form of the game and we felt it was the perfect opportunity to reintroduce him to Test cricket and for him to play his full expressive way in the Test arena as well."