Not just smileys, this happens when I try to put in any tag as well (Img, quote, etc.) And not while just editing...there. I just tested it.
Yes it's annoying, I'm aware of that. A few years ago I was thinking of taking the code from phpBB3 (which I think fixes this) and using it here. I'll try to check how easy it will be to do, but considering this isn't a huge priority it might not be for soon.
The only time that this is really annoying is when you're typing up a long post, especially when breaking down a large quote from another user, and you want to use a smiley or one of the bbcode buttons... Then after copying the generated code, you have to scroll back up and try to find where you were typing earlier.
My main workaround for that is becoming familiar with most of the bbcode functions and simply typing them out inline without using the fancy buttons.
The only time I like to use the button is to apply tags to selected text, such as putting img tags around the pasted url for an image.