Improved Divine Smite does NOT add 1d8 to the spell slot you are using for the Smite. It just adds to your regular weapon hits. This was clarified in the most recent errata. Do try to keep up.
Improved Divine Smite
By 11th level, you are so suffused with righteous might that all your melee weapon strikes carry divine power with them. Whenever you hit a creature with a melee weapon, the creature takes an extra 1d8 radiant damage. (DELETED:
If you also use your Divine Smite with an attack, you add this damage to the extra damage of your Divine Smite.)
Removing the italicized sentence
in no way implies you don't combine DS with IDS (if that is your thought). If the two were meant to be non-complementary, the errata would have stated so, but then that nearly defeats the purpose of IDS in most games IMO since many tables have so few combats between rests and at 11th-level or higher Paladins routinely add DS to their attacks. That doesn't mean they don't get to also add IDS since it applies to every hit.
You realize this actually improves Paladins? Yes, it adds to your regular weapon attacks, that was always understood, but with the errata it means you can add the full 5d8's for Divine Strike even more often since IDS isn't imposing the cap prematurely. I suppose that is why some tables do use the full 6d8 (5d8 + 1d8 IDS).
Now, what is REALLY happening is because of the IDS, you get the extra d8 all the time. I'm not factoring that in at all, just in the instances when DS is used. Strictly speaking, if you want to argue that I shouldn't be, then certainly I will agree that DS
alone is only a 77.4 point increase, not over 100. However, I will continue to contend that since at 20th-level, IDS is always in use, it adds even more, bringing it to over 100 when DS
is used. Perhaps at this point it is simply a matter of perspective.
Either way, DS ends up beating the pants off of action surge in raw damage potential between long rests: DS 243 vs. AS 165.6, even without IDS factored in.
Action Surge turns are usually when you do things like use Trip Attack on your first hit to get advantage on your other attacks (hence increasing damage). It's also when you're most likely to use Precision Attack on narrow misses. Or pile on Superiority Dice on all your hits.
It's called frontloading damage all into one round. Fighters do that better than anyone.
I am not arguing the benefits of Action Surge for frontloading, or denying Fighters can do that better. Of course, if the Paladin hits with both attacks, his average DS frontloading is actually better than a Fighter at 20th-level, but I digress. I don't know what you mean by "pile on Superiority Dice on all your hits." since I'm not aware of any Battlemaster ability that allows you to add your dice as damage
after the hit has been determined. Admittedly, I don't play Battlemasters really so I could easily be missing some maneuver that does allow this.
At any rate, you are still implying a Battlemaster build, which is only one archetype of Fighter. By default, the assumed standard archetype is actually Champion in the OGL. And I am not including any of the features Paladin archetypes would add so I wouldn't concern myself with what Battlemaster adds.
What you
should be arguing, really, is that due to the additional attack extra attack provides, a 20th-level Fighter will outstrip a 20th-level Paladin (even with IDS) by 8.4 hp of damage per round. So, once AS is gone and DS have been used up, the Fighter will consistently deal out more damage than the Paladin. In less than 10 rounds after DS is gone, the Fighter's cumulative damage between long rests exceeds the Paladin's.
So, who is better at dealing damage really comes down to how many rounds of combat you have between long rests (allowing for two short rest, of course). With quick combats allowing short rests in between, a Fighter will prevail. In moderate combats without short rests or less often, the Paladin with DS is superior, and in several combats (with or without short rests really), the Fighter eventually takes over again.
This is why I am not a fan of white room analysis, too much depends on the way a table plays and when and how quickly features such as AS and DS can be used. Finally, we have digressed from the OP about TWF fighting long enough. If you feel compelled to continue the discussion, maybe a new thread?