The specific reason that Montresor smiles is because the thought of Fortunato's "immolation" pleases him. Immolation is a term for burning, meaning that Montresor imagines Fortunato burning in the fires of hell for his crimes. Montresor feels that this fate is justified, and it pleases him because it fulfills his need for retribution and completes a "cycle of justice" where Fortunato's crimes are repaid with a suitable punishment.
The broader reason that Montresor smiles is because it was his "wont" to do so. One's wont refers to one's habits or customs - Montresor was in the habit of smiling at Fortunato or in his presence, probably a pained smile that hid his inner loathing so as to keep up congenial public appearances. Montresor needs to smile now to avoid hinting to Fortunato that anything is wrong, or that Montresor is upset - if he fails to smile in the way that he always does, this will indicate that something must be seriously troubling him, and Fortunato will grow suspicious. Fortunato isn't a very insightful person anyway, and he either doesn't perceive or doesn't care that he has insulted Montresor in such a way as to deserve the kind of vengeance in store for him.