By allowing a limited number of smoking licenses to be given out by local councils the government can restrict how many smoking establishments there are to ensure that public health is considered appropriately while still giving the owners of pubs and clubs freedom to allow people to smoke on their property.
It is the perfect compromise, allowing business owners to decide how to run their businesses and customers to weigh up health risks for themselves. Those who abhor smoking can have a nice evening out, so can those who enjoy it.