Miller argued that Smith would've been lost in the system at City if he had moved south.
He told the Scottish Sun: "Manchester City were keen on Cammy and, again, his parents were involved in our discussions.
"We had conversations about what was best for Cammy's immediate future, to get the most out of his career.
"Manchester City are another huge club, but there was a likelihood he would go down there and get lost in the numbers game they play there.
"Cammy and his folks are big Aberdeen supporters and we were helped by the fact that Alex McLeish's boy John became the lad's agent.
"We had good relations with John, Cammy and his parents. Now you see Cammy flourishing in the first team and it was great to see him score at Inverness."