Altaïr had access to smoke bombs during his quest for the chalice and used them in generally the same way Ezio Auditore used them and he can carry up to 5 of them. He seemed to not use them anymore after the events at Solomon's Temple.
15th Century
Smoke bombs are disposable and must be purchased for 350 florins each. Players can carry a maximum of three smoke bombs at a time, which are stored in a non-upgradeable pouch.
16th Century
Smoke bombs return when in Rome, with the same abilities as before, though the actual cloud itself is visually a lot smaller than in the previous game. Smoke bombs are also used by Assassin Recruits once they reach the eighth rank.
Technique
Using a powder "technology" from the Far East, the bomb releases a thick, grayish smoke screen for 8 seconds when thrown, to allow Ezio Auditore to flee his enemies, or assassinate them quickly in those seconds. The clever and strategic use of Smoke Bombs during difficult assassinations or large guard fights is a very important aspect in the games, as they allow players to strike specific targets or take down larger groups of enemies without being seen or encountering resistance, and allow players to slip in and out of hotspots undetected.
Trivia
In Assassin's Creed II, the smoke bomb pouch is labelled as "small" despite not having any upgrades.
While looting Brutes, there is a high chance of obtaining some smoke bombs.
In Brotherhood, there seems to be a small spark of light when a smoke bomb is being deployed, unlike in Assassin's Creed II, where there is no spark.
In Assassin's Creed II, smoke bombs are very helpful for earning the achievements "No Hitter", "Messer Sandman", and "Sweeper".
In Brotherhood, one of the BAM (Brotherhood Assist Move) maneuvers has the Assassins throw numerous smoke bombs around Ezio before descending to aid him.
In Brotherhood, the player may lock onto a far-off NPC before pressing the "throw bomb" button to throw the smoke bomb from a distance.
In Brotherhood, Papal guards are immune to the effects of smoke bombs if not taken by surprise, i.e. in combat.
Smoke bombs also appear in the Brotherhood multiplayer mode as an ability.
In Brotherhood, Cesare Borgia is completely immune to smoke bombs.