Canadians don't call M&M's smarties. They are two seperate, albeit similiar types of candies.
As for the Bacon issue, follow along.
There are two types of bacon in Canada, Side Bacon and back Bacon. The standard breakfast bacon is in actuality, side Bacon, named for where on the pig it is located. The other option, which Americans call "Canadian Bacon" is back bacon. Also named after where it is located on the pig.
The term "back bacon" saw a spike in popularity in the eighties when it was often referred to during the "Great White North" segments of the sketch comedy show SCTV.
As for why it is called Canadian Bacon, I have no clue.