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Smoking is only permitted in designated areas outside most of the terminals.
Update Nov 2019 from Richard C.: Just to
update, there is an outdoor area at each end of terminal 1 near the
drop off point. But no smoking inside the terminal at all. It is
correct you can't smoke if in transit, unless you have enough time
to leave the terminal (i.e. enter Australia) and then would need to
redo immigration and security in plenty of time. I don't know how
long their 'exit' is though.
Terminal 1, International
There are no smoking facilities inside or outside the terminal
Terminal 2: Domestic:
There are no smoking facilities inside or outside the terminal
Terminal 3: Quantas Domestic
Update from Blake, Dec 2018: If you are from
OS and travelling domestic within Australia, qantas T3 is the only
terminal that allows smoking right outside the terminal. Much more
relaxing arrival or departure.
For connecting flights you must enter Australia and smoke outside terminal then go through Security again for your flight.