Using regions (or otherwise folding code) should have nothing to do with code smells (or hiding them) or any other idea of hiding code you don't want people to "easily" see.
Regions and code folding is really all about providing a way to easily group sections of code that can be collapsed/folded/hidden to minimize the amount of extraneous "noise" around what you are currently working on. If you set things up correctly (meaning actually name your regions something useful, like the name of the method contained) then you can collapse everything except for the function you are currently editing and still maintain some level of context without having to actually see the other code lines.
There probably should be some best practice type guidelines around these ideas, but I use regions extensively to provide a standard structure to my code files (I group events, class-wide fields, private properties/methods, public properties/methods). Each method or property also has a region, where the region name is the method/property name. If I have a bunch of overloaded methods, the region name is the full signature and then that entire group is wrapped in a region that is just the function name.
