how do you make stuff smooth like the horse model does
For getting the geometry shaped correctly, probably the proportional falloff tool (if using Blender) is the best way to go, but you could just do it manually if you know what you are doing.
And then for the visual smooth-shading, you just use the technique in the OP. In general, you'll want faces that roughly face the same direction to be connected, but split from faces that are along hard angles (especially 90deg or more), such as along the front of the horse, for example:

A lot of this also just takes some experimentation and trying out what looks best, and really it's more of an artistic process imo. It really depends on what aspect of the model's form you want to emphasize.