Here's what, essentially, happens: As Blue_tidal would claim in a later quasi-interview, on the night in question, he saw a smiling man while walking to his Seattle home at 1 in the morning. The man stood across the street, dressed in a ratty suit, and began dance-walking toward him. He was grinning like a maniac. Blue_tidal walked, then ran, from the man, who also started running, and they eventually met each other in a suitably creepy-as-fuck way. I'm really not doing the thing justice, because the writer sets the mood so well—but you get the sense throughout the whole thing that it's very believable. A big city, no cops around, a crazy man: It could happen to you.
Since the story was published, blue_tidal says, “It's been told, retold (in some cases altered) and passed around over the last seven months to the point where many people don't know the original story, or that it started right here on Reddit. I would say it has a life of its own at this point.” A subreddit dedicated to other sightings was populated by a few dozen people. They've not occurred in Seattle, but mainly in the Midwest, specifically small-town Iowa. And while they're probably mostly bullshit, this is a weird thing for dozens of people to just make up. And the Smiling Man never does anything supernatural or out of the realm of reality. He could just be an insane guy who has perfected this clown routine.
With all that said, Go for Broke pictures has made a film based off the original encounter. It'll stick with you.
[H/T: Viral Viral Videos]