Becuse memorization slots. Chameleon Skin is consistently useful. Smoke Cover is, at best, extremely circumstantial and expensive to use. I'd almost take literally anything else.
Honorable mention: Vaporize. Under an unassuming description and targeting reticle hides an amazing utility spell that can turn entire areas into permanently covered in steam. It can even turn fire surfaces with 1 turn remaining into 2 turn burning air, at which point your fire mage can put out another fire surface. Strangely, it does not work on oil: should've turned oil into smoke or simply poison gas. Or something.
Am I mad? You can turn clouds into electric/poison and then bless them to make them heal. You can do that, right?
In any case, backlash into smoke it's a good setup to force a ranged enemy to move and if they have ripped tendons it's better.
You're confusing Smoke with Steam, 100%. You can't Backlash into Smoke, afaik. Smoke blocks line of sight. I could be wrong, though. Backlash does require Line of Sight, no?
