I tried to build a greydwarf smoke trap to farm resin and jumped into debug mode to see why it failed. It turns out only specific enemy types take damage from smoke inhalation, and these types largely make logical sense.
Animals such as boar, deer, wolves, and deathsquitos are affected by the Smoked status in exactly the same way as the player, taking low amounts of regular damage while remaining in the smoke.
Greydwarves, being trees and likely photosynthesizing instead of breathing, are not affected by the Smoked status.
Aquatic creatures like necks and leeches, do not take damage as they do not breathe air.
Undead creatures like skeletons, draugr, or ghosts, do not take damage as they also do not breathe air.
Fulings are affected by Smoked, being a conventionally "alive" air-breathing enemy species.
Tests on trolls, fenrings, serpents, stone golems, and bosses were inconclusive and likely require construction of a larger test rig. It is difficult to say for sure if a setup can be created where there is sufficient smoke to cover their larger bodies before dissipating.
Source: https://www.reddit.com/r/valheim/comments/q241ad/til_enemiesanimals_can_be_damaged_by_smoke/
