KITT could spray a plume of smoke from under the rear bumper. Used as a screen to evade attacking vehicles.
("Knight of the Phoenix";Merchants of Death")
In "Knight of the Phoenix", the Smoke Release button was on the arm rest panel along with the Oil Slick button. This was probably done so that actor Barrit Oliver (Buddy) could better reach it. In "Silent Knight", actor Paul LaGreca (Tino) activated Smoke Screen by hitting a button on KITT'S overhead panel. Again, this was probably done so that it was easily reached, seeing as how the button is way over on the other side of the dashboard. (And I'm sure Michael didn't want some kid leaning over his lap for that!)