Rust is a common problem in wood smokers, and although it won't hurt you, it should be removed. Rust occurs when moisture in the air oxidizes the iron in the metal, and is more likely in a humid climate than a dry one. Don't be in a hurry to clean your smoker with soap and water, which removes the protective layer of oil and smoke that prevents rust from forming.
Because rust is simply the oxidation of metal containing iron, it is not toxic and poses no health threats if small amounts of it get into smoked food. Large flakes of rust may contain sharp edges which could cause injury if you ate them. In general, however, the rust in your smoker is not likely to harm you.
Over time, rust in your smoker will corrode the metal, potentially reducing the lifespan of the smoker. Rusted metal slowly disintegrates into an orange powder. The large panels of your smoker may not be harmed by rust, but smaller pieces, such as latches and attachments, may wear thin or cease to function properly when rusted.
Treat your smoker with the same care you'd treat a cast iron pan to prevent rust. Oil the entire inside of the smoker before you use it, and season it again after a thorough cleaning. Clean the smoker each time you use it by misting the interior with a spray bottle filled with water while the smoker is hot. The mist will turn to steam, which will soften and dissolve any food debris or grime attached. Store the smoker in a protected location when not in use as exposure to rain or snow will accelerate rusting.
To remove rust, take the smoker apart and scrub the rust with a stainless steel brush. Once the rust is gone, oil the smoker inside and out. If you prefer not to oil the outside, paint it with a paint labeled for use on barbecue grills. Plan to remove rust and season your smoker at least once each year.