I get what you're saying. I even have had a similar approach with my career to an extent. I could go make $2m more a year but I'd probably have to move to NYC or some other place I never would want to live, certainly at this point in my life, and otherwise would have a lot more pressure and need to deal with crap I don't want to. I'm in a pretty good situation with people I like in a place that is livable and making very good money. It's not about chasing every last dollar or chasing prestige ... at least not for everyone.
Here's the thing with Smith, though. First, and most significantly, if Oregon State is positioned like WSU--not perfectly clear, as they seem less accepting of the MWC death knell than many of our fans--they probably aren't even going to want to pay him the kind of money they might have come up with in the former status quo ... say, something like $6.5m/year. They already signed him to a $5m+ deal per year last season. That just doesn't work in a MWC or Pac/MWC situation. Even Dickert money doesn't work. So him moving on lets both him and Oregon State avoid the painful discussions and calls that otherwise would have to happen if he was going to stay.
Second, let's say he goes to Michigan State, fails, is fired in his 4th year, or whatever. A place like that probably pays him $7.5m a year, minimum. Other than having to move the family and take on a lot of pressure, which is part of the deal in this line of work, what's his real downside? He's already set for life even with his current earnings and guaranteed money. Add to that an additional $35-45m guaranteed and he's ultra-set. And here's the main thing ... you really think Oregon State wouldn't welcome him back as an alum down the line, even if he "failed" to an extent at a place like Michigan State? As long as he doesn't burn too many bridges, which shouldn't be that hard given the reasons for both "sides" to move on right now, he's always going to be able to come back.
Oregon State, WSU, and these other MWC-financed programs are going to be churning through head coaches every 3-5 years anyway. Either they are bad and get fired or they are good and get hired away. There's just no way to compete. Under the prior status quo, it was at least possible to try to get guys to stick around making half of what they would at a blue blood. Doesn't work if you're small-time, there's absolutely no realistic way to do anything meaningful, and it's more like 1/8 or 1/10 of what they would make at the blue blood.