A Shmo is a creature that results from having the parents of a Smurf and a Snork. Shmoes are generally blue, like Smurfs, but they also have the big eyes like Snorks do, and Shmoes can also live underwater. Now, the reason the word Shmo may be used to insult someone, is that Shmoes do NOT have the best IQ out there, if you know what I mean. They don't have a whole lot of common sense, and they often do things on sudden impulses, that usually lead to them looking really dumb.
"Dude, you are such a Shmo!"
"T.V. is for Shmoes, man..."