When Tom says that he always thought that it would have been Clemenza, Michael's reply is "It's the smart move" followed by "Tessio was always smarter."

I believe that Michael's saying that it was the smart move means that because of the way that the Corleone's made themselves appear to be weakened and declining in power, that anyone not privy to being part of the facade the Corleone's put on, would realize that the power was now with the Barzini family and that in order to survive would have to make a deal with the Barzinis That would be the smart move and Tessio was always smarter.


That's my interpretation of what Michael meant.