Technically, it can be smoked fat side up. It boils down to preference. The flavor from the seasoning is retained when it's smoked fat side down. And, with the fat being down, it adds a layer from the direct heat if the heat source is coming from the bottom. If smoking fat side up, the fat will melt and baste the surface of the meat. Some believe this makes the steak more juicy. But the melted fat doesn't penetrate the meat. It does add additional flavor and moisture to the crust when smoked fat side up.