From Bulbapedia, the community-driven Pokémon encyclopedia.
Smeargle Paint is an activity in the Pokémon Channel video game. It can be accessed by selecting the "Smeargle 2" on the bookshelf. In the game, the Smeargle 2 is used to take a screenshot of the TV. The player then uses the Smeargle Paint program to color in the picture (the screenshot is converted into lineart). Initially, the player is only allowed to take screenshots of the Pichu Bros. anime, but later on the Smeargle 2 is upgraded to work on all channels.
After the player has completed their picture, it can be placed in the frame on the wall of the player's house. Only one picture can be hung up at a time, so if the player replaces an old picture with a new one, Professor Oak will sell the old one at auction. The picture on the player's wall is also reviewed by Smeargle on the "Smeargle's Art Study" program.
Included in a new copy of Pokémon Channel are three e-Reader cards. When scanned into the game, two of them provide new lineart to color in (one of Pikachu and one of Kyogre), and the third provides a new palette of patterns that the player can use to paint with.