How to decorate a cake so that the icing is smooth?
There are a few things to look at here:


shape of cake before you start icing
What kind of icing to use, and the kind of effect that it has visually
Specific techniques to use with the cake and the icing


It looks like your original question has more to do with the cake itself before icing.  Good quality cake pans are the key to getting a cake that is a consistent shape, and to make sure you put enough batter in the pans to get the size and shape you want.  Make sure you have straight sided pans that bake your cake evenly.  

http://www.amazon.com/Wilton-Aluminum-Performance-9-Inch-Round/dp/B00006G958/ref=sr_1_12?s=kitchen&amp;ie=UTF8&amp;qid=1396099879&amp;sr=1-12

This link is to an example of the kind of pans that have straight sides.  I have three inch deep pans, rather than two inch like the ones in the link.

I would avoid cutting a cake down to size, as you will likely have crumbs everywhere!

On to the icing parts:


Are you looking to use fondant, which is a separate kind of icing
layer that is rolled and placed on top of the cake?  This is what
usually gives a very smooth look. Fondant is a specific ingredient with its own set of skills required to get the look you want.
If you are not planning to use fondant, some of the result is
dependent on how you prep the cake with a "crumb coat" first, before the regular icing layer, to control the amount of crumbs in the final coat of icing. There are YouTube videos, and other web links on how to do this.  This step really does improve the quality of your icing.
Above all, with the tools you have, and the skills you need, PRACTICE will make all of this advice come together.  To get the look you want, you will need to practice a lot.