+1 to gmw
Part of "Hand crafting" is going in and cleaning up the mess that comes from automatic conversions. While those conversions are easy, and get the job done (mostly), they are usually very "sloppy". While the reader might not "see" any effects from a single conversion from a well-made source, taking that conversion and converting it again increases the chance of errors/flaws quite a bit. Taking a .doc and SavingAs html and then using some software to convert that to epub and then using that epub to convert to mobi and then.... I would think that a reading device would implode when trying to open that file!
Having a clean, hand crafted file is the best way to minimize any rendering artifacts/errors that a reading device/app might display due to that sloppiness.
I personally have never used, or edited, a Smashwords "meatgrinder" converted book so I can't comment on the quality of it's conversions. But the fact that it starts with a .doc is scary...and "grinder" does not promote confidence...
Sigil is software that makes it easier to hand-craft/clean/edit your html documents. It doesn't do any "conversions" from one format to another. The closest it comes is automatically creating your TOC and metadata files - but even those can be, and sometimes are, manually edited. This "source" epub can be used directly by any reader/app except Amazon's kindle...and they have a single conversion to their mobi format.
I have read that Smashwords is accepting ePubs now to begin their conversion process, but that there are still many glitches in their "beta" program....but that is another thread.