Australia had South Africa reeling at 43-4 at the close on Wednesday after being put in to bat first and scoring 212.
Smith marked his first outing since March with 66 runs and felt Australia were in the driving seat after the opening day - and are now looking to capitalise on their advantage.
“I think the bounce is going to be variable throughout the game, as we've seen already on day one, so hopefully we can get a few early wickets in the morning and sort of go through them and have a bit of a lead. That's the ideal scenario for us right now," he said after stumps on Wednesday.
Australia are 169 runs ahead after a day in which 14 wickets fell.
“I think we're in a good spot. We've probably had a few missed opportunities with the bat to try and get a bigger total, but I think the wicket offered something all day," he said.
“We could have had a better day, but we're still in a nice position."
Smith, a prolific run scorer at Lord’s, was returning after a lengthy holiday in which he said he hardly picked up a bat.
“I felt good, felt in a nice place," he said. "I love batting here at Lord's and enjoyed my time while I was out there but left a few in the shed, unfortunately.
“It felt quite tricky, the wicket felt like it was doing enough all day... probably a little bit on the slower side, and then one kind of zings through.”
Smith was irritated to have been dismissed by part-time spinner Aiden Markram, trying to slog him to the boundary but getting a healthy edge to slip.
“I'm still trying to fathom how I've done that,” he said.