ET spoke with the 47-year-old actor on Friday in Louisville, Kentucky, where he served as a pallbearer at Ali's funeral. Smith portrayed the boxer in the 2001 biopic, Ali, and was nominated for a Best Actor Oscar for his performance.
"It's absolutely beautiful. We did a two-hour procession through the state ... the outpouring of love," Smith told ET's Nischelle Turner exclusively. "I learned a really valuable lesson about how the moment of the end of a life illuminates how it was lived. And every day you have to focus and concentrate on making sure you're living your life in a way that it illuminates the things you want illuminated, and the things that were illuminated today were his love, and his heart, and his unconditional appreciation for all people of every race and color."
"Every age was out there," he added, referring to the thousands of people who lined the streets in Louisville to pay respect to Ali. "It was beautiful. It was absolutely ... 'celebration' is the right word."
Smith revealed that he and boxers Mike Tyson and Lennox Lewis -- who also served as pallbearers at the funeral -- swapped personal stories they had of the champ.
"We all sat around, you know -- Tyson, Lewis, and a lot of Ali's family and me -- for about an hour," he shared. "We all just told the stories and our memories. You know, for me, it's just humbling to be able to be here with the family in this time of need. He lived the perfect example of how a human being is supposed to live their life. It was beautiful."
When it comes to his own favorite memory of Ali, the Suicide Squad actor said he would never forget how close Ali was to his fans.
"As an actor, whenever you play a role, you always take away something that lasts with you for the rest of your life, and I remember [Ali] would just walk away, and you'd look, and he would just be in the middle of a crowd of people," Smith recalled. "No security. He just got on a bus."
"I said, 'Champ, you just walked into a crowd of people. You got on a bus and just rode away and you weren't going anywhere. What is that?'" Smith continued. "And he said, 'Aww man. They ain't ever seen nothing like you before. You got to let them touch you and know you real. You know?’ And I just thought that was such a beautiful idea -- that we have to let people actually physically touch you for the aspirational qualities."
ET also caught up with Ali's daughter, 38-year-old Laila, on Friday, when she talked about her late father's relationship with Smith.
"He appreciated the great job that Will Smith did playing him,'" she told ET. "My father appreciates the role that Will Smith played."
Laila also praised Smith's performance, and said that she felt it was "very special" that the A-list actor would be a pallbearer at her dad's funeral service.
"My father had a big impact on his life," she said. "He did a tremendous job playing that role, and he will forever be associated with my father, because as an actor, that's kind of a spiritual thing, playing Muhammad Ali -- and being able to do it so well. Channel that energy that he needed to bring to that role."