I think Ole wants Smalling to stay but as a 4th choice and Smalling probably refused. Smalling is good in defending and if anything he's also very good dealing with crossings. The first goal and third goal against Chelsea won't happen if Smalling actually plays, he has aggressiveness, strength & quick to deal in that type situation and we won't conceded that last minute from corner vs Southampton if Smalling takes the Lindelof's place.
Smalling's ball distribution isn't bad as well. However, his main issue is that he lacks composure when on the ball. He can't do like this:
You're comparing apple to orange, and missing the point.
Pep would be crazy with that sequence of play: Maguire doesn't involve the GK as passing option thus outnumbering opposition in 2 occasion. Good on ball ability, but took unnecessarily risk for nothing. Next Fred has time to look before receiving the pass, and turn; but didn't. Ended up with Maguire switching play and opposition team could challenge for that ball (Looked like Ashley Young lost that duel too). The outcome didn't show the issue about beating the pressing!
This kind of sequence still happens nowadays. Can't blame DDG, Lindelof positioned well, why the distrust in teammates?
Here we have 2 players known to be pursued by Pep's City! They have ability, but the missing point is coaching instruction. Even players eventually got the boot from Pep, would get them to follow his instructions. They can make individual mistake like Koralov John Stones did in his first season at City. They're still involved heavily, since they're following the tactical work Pep wanted.
So the question remains: is Ole having such style that demand such on ball ability, that justifying deeming certain other players as deadwood? Why someone like DDG is given this long and expensive contract, when a GK with great distribution should be the next thing on the list if modernizing our style is really our goal?