Thanks for asking this question. I've been trying to suss out how it works, too, but hadn't thought to ask the players. (U r smrt. Me, not so much.)

I'm amused that the answer given is pretty ambiguous. I appreciate that a "smudge convention" gives the players room to create confusion in certain conversations and that it allows for occasions when a player may unwittingly give away a thought s/he intended to censor.