Person 2: I know where you're going with this. I don't appreciate that you'd try to fuck me over in this way.
Person 1: Dude, it's not like that. I was just touching some Smencils I have in my pocket.
Person 2: Oh, I've always wanted to know what those smell like. I swear to Christ, it'll be the death of me when I figure out how to attach a smell to a pencil. All right, then... Aaaaagghh! Asshole!
However, most people who use this joke haven't actually gotten any, and are saying it to be funny or insulting, or are bragging about it. Best when used towards friends about people they're close to.
Timmy: "Of course, what about her?"
Jimmy: " Smell my fingers ;) "
Ben: "So me and that hot co-worker Jenna went out to lunch somewhere private"
Ben: " Smell My Fingers "