Purification-Release-Protection
Smudging is the act of burning sacred herbs and using the smoke to bless, purify and cleanse oneself and their space. Its almost like taking an "energetic shower" -cleansing your body of all that negative energy and opening/preparing your spirit for what's about to come.
The best way to smudge is to visualize your intentions during the act. As for all that negative energy-as the smoke rises imagine it drifting away as well.