"Doesn't work" means that the smite will go off on the appropriate target, but the secondary effects of purple smite (HP/mana restore, AoE Damage and Stun) do not work. The Smite particle is still purple though.
1. Acquire Ranger's Trailblazer with Devourer enchantment
2. Smite a minion or non-epic monster to verify normal functionality
3. Upgrade Devourer to Sated Devourer
4. Smite a minion or non-epic monster and observe - "Doesn't work"
Before "sating" Devourers:
I've tested Red Smite as well and it doesn't seem to have this issue (the debuff seems to apply to champions just fine before and after Sated Devourer). Haven't tested Blue or White Smite yet.
Also, it seems that buying another "color + Devourer" smite first, Sating it, then selling it into Purple + Devourer will not incur this bug, despite the new Devourer item being sated.