Motion smoothing is not broken. It is doing exactly what it was designed to do.
The problem is that most people don't want that — and it ships enabled by default on almost every television sold, at every price point, from every manufacturer. Understanding why requires separating what the technology does from what the marketing implies it does.
Motion estimation and motion compensation (MEMC) works by analysing consecutive frames and generating synthetic intermediate frames between them. A 24fps film signal becomes a 60fps or 120fps signal with fabricated frames inserted between the real ones. The image is smoother — objectively, measurably smoother. Movement across the frame contains less blur and less judder.
The issue is that 24fps film does not look like 24fps footage in ordinary use. It looks like film. The motion characteristics of 24fps — the slight blur on fast movement, the specific quality of camera pans — are part of how film has looked for a century. They are not defects. They are the medium. Motion smoothing removes them and replaces them with the motion characteristics of live video. A film shot by a director of photography with carefully considered camera movement looks like a home video. A period drama looks like it was shot last Tuesday on a consumer camcorder.
This is the soap opera effect, and it is not a bug in the algorithm. The algorithm is working correctly. The result is simply not what most people watching film content want.
Sports and live television are different. 25fps or 50fps broadcast content with fast lateral movement — a football travelling across the frame, a sprinter finishing a race — benefits from motion smoothing in the way its engineers intended. The motion is real, not cinematic, and the smoother rendering is an improvement rather than a distortion.
The practical consequence is that a single on/off setting is the wrong control. What you want is motion smoothing off for film content and on for live sport. Most current televisions allow this through a Custom mode within the motion settings that separates blur reduction from judder reduction — adjusting these independently lets you apply some judder correction without generating the synthetic frames that cause the soap opera effect. The setting to look for is judder reduction at a low value and blur reduction at zero or minimum for film content.
The reason most televisions ship with full motion smoothing enabled is that it looks impressive in a retail environment. In a bright showroom, a smooth 120fps image catches the eye. At home, watching a film in the evening, it catches it for the wrong reasons.