Well, everybody uses standard B-S to quote option prices, just like everyone uses interest rates to quote bond prices.

But nobody prices options while assuming all the good old innocent assumptions underlying the original derivation of the formula. That, indeed, can be seen from the fact that different vols will be quoted for different strikes at the same expiry.

The vol smile is mostly a byproduct of greater demand for far OTM options to hedge tail risk, alongside more sellers for ATM options which depresses the middle portion of the curve. I am not sure why this is a problem

It's an example of how real life pricing deviates from Black-Scholes. At the same time the pricing is correct in a sense that tail risks are greater than would be expected from a random walk.