I'm not sure of the official policy, but when we were there last year, the hotel was non smoking inside, as were the bars in Funchal. There was plenty of outside provision for smokers- and there is a terrace at the airport where smoking is allowed.
kate

What you do is, put the tip of the fag in your mouth and with one hand get out your lighter, flick it till it lights then put the flame to the fag and suck in deep, then you are smoking, simple
Dave.