The idea of it was it'd drive forwards into enemy lines and infantry would run up the smoke to avoid HMGs. Nobody uses it like that, but that's why it's there.
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Smoke does not protect from suppression due to AOE suppression (it actually make things worse).
It has also been patched:
"Churchill MK IV Infantry Support Tank
Given its role as breakthrough unit that can soak up incoming fire. Smoke has also been adjusted to allow the tank to move ahead and cover the advance or to pull back from danger.
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Smoke ability no longer decreases speed
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It is clearly there to be also used as protection similar to other smoke dispensers.