Yup, it's a tongue-in-cheek phrase that is used pretty regularly to imply regret. Let's say you decided to go drinking one night and you end up drinking to the point where you black out and forget everything that you did that night. The following day, you meet your friend for breakfast and she says to you, "You smell like drinking and bad choices." Drinking generally causes you to make bad choices since your inhibitions are lowered. At the same time, usually we regret making bad decisions. Hence, it means: You smell like drinking and regret. Maybe you went up to some random girl at a bar and got rejected by her because you said something stupid. Maybe you went over your friend's house later and threw up in their kitchen. It's also a cheeky way of saying "you must have had fun last night." It's a pretty playful phrase that you could say to someone who looks hungover. Hope that helps!