The Smoke Monster was a giant smoke avatar that was created by Macaque.
While MK was training with Monkey King, Mei called him to tell him that the Smoke Monster was attacking Megapolis. When MK attempt to stop it, the Smoke Monster easily defeated him, but was stopped when Macaque arrived.
After Macaque found out where the Smoke Monster lived, he took MK there so he can destroy it. When he did, the Smoke Monster stole MK's powers and gave it to Macaque, revealing that it was actually working for him all along. When Macaque used his shadow clones to immobilize Monkey King, he then used the Smoke Monster as an avatar to finish off MK.
However, when MK remembered what he learned from his training, he regained his powers and used the Golden Staff to defeat Macaque, destroying the Smoke Monster in the process.
The Smoke Monster was a giant-sized avatar made out of purple smoke that resembled a mummy with pink glowing eyes.