I think this "用" can translated in "for" in English 喫煙用テラス→ A terrace for smokers Other examples 男性用トイレ→ A toilet for man 女性用トイレ→ A toilet for woman 災害用伝言板→ BBS for disaster happen 中学生用教材→ A Textbook for a junior high school student

Means "use of" or "used for purpose x". Your sentence means "In the restaurant, there are separate tables for smoker's use." 喫煙 + 用 = Smoker's use 舞踊用の衣服　Clothing for dancing 管理用 For administrator use 調理用 For cooking Or the the word can be used by itself meaning "errand, task, business." 何かご用がありませんか？Is there anything I can do for you? 何かご用ですか？ What can I do for you? / Do you need something?

Thanks everyone!

you can think of it here as "to do": the terrace where you can do smoking