How are M&Ms and Smarties candies different?

First, Smarties are slightly bigger than M&Ms. An M&M is approximately 1 cm in diameter while the Smartie is 1.5 cms.

The most noticeable difference between the two is the candy shell. The Smartie shell is much thicker and has a very pronounced crunch to it. It also seems to have a flavor. When I looked at the ingredients for the Smarties, I saw that there is wheat flour (and cornstarch & sugar) in the shell whereas the M&M shell is made only of sugar, cornstarch and color. The Smartie has a slightly graham cracker taste to it.

http://www.candyblog.net/blog/item/head_to_head_smarties_vs_mms

Brown Smarties used to be coffee, red plain and orange orange flavour. Now only orange are different inside.

https://en.wikipedia.org/wiki/Smarties (satguru)

If you're referring to American Smarties, there's no chocolate in them and they're very mildly fizzy. Their origin is in the British Fizzers (and Love Hearts), the base of the Swizzells Matlow company's sweets. If you're talking Canadian or European, Jacob's right. (American Smarties are similar but not identical to Canadian Rockets.) https://en.wikipedia.org/wiki/Smarties_(Ce_De_Candy)
https://en.wikipedia.org/wiki/Smarties_(Nestl%C3%A9)

I'm talking about British Smarties.

Another way they are different is how they are packaged, M&Ms come in little packets while Smarties come in tubes.

http://www.nestle.co.uk/brands/chocolate_and_confectionery/chocolate/smarties