According to Etymonlime the term smashing has undergone the change in meaning like other terms such as: fabulous ( see below).

smashing (adj.):

1833, "violently crushing to pieces," present participle adjective from smash (v.). Meaning "pleasing, sensational" is from 1911.

Fabulous:

• Sense of "incredible" first recorded c.1600. Slang shortening fab first recorded 1957; popularized in reference to The Beatles, c.1963.

• Fabulous (often contracted to fab(s)) and fantastic are also in that long list of words which boys and girls use for a time to express high commendation and then get tired of, such as, to go no farther back than the present century, topping, spiffing, ripping, wizard, super, posh, smashing. [Gower's 1965 revision of Fowler's "Modern English Usage"]

Probably its origin meaning 'impressive' comes from Tennis:

Smash:

• 1725, "hard blow," from smash (v.). Meaning "broken-up condition" is from 1798; that of "failure, financial collapse" is from 1839. Tennis sense is from 1882. Meaning "great success" is from 1923("Variety" headline, Oct. 16, in reference to Broadway productions of "The Fool" and "The Rise of Rosie O'Reilly").

A smash in tennis:

• is a shot that is hit above the hitter's head with a serve-like motion. A smash can usually be hit with a high amount of force and is often a shot that ends the point.

Source:Wikipedia

The slang smash means a great success and was first used in the world of entertainment.

A smash

If a musical, play, or film is a smash, it means it is hugely successful. Whenever a show or movie rakes in more money than its leading predecessor we hear the claim: breaks box office record. In this instance break, which is synonymous with smash, has positive connotations.

Later in the world of rock'n'roll and pop we hear of songs hitting the charts and being called smash hits. So it's not difficult to see how a smash (hit) could eventually evolve into the adjective smashing [= great] or vice versa.

Dictionary.com says,

smash hit an outstanding success, as in
She was a smash hit in the role of the governess,
His first book was a smash hit but this one isn't doing well. [c. 1920 ]

Merriam-Webster Dictionary tells us

smash _^noun: someone or something that is very successful or popular
- the sound made when something hits a surface very violently
- a hard downward hit in tennis or other games

Origin of SMASH
perhaps blend of smack and mash
First Known Use: 1725

smash _^verb: to break (something) into many pieces : to shatter or destroy (something)
- to hit (something) violently and very hard
- to hit (a ball) downward and very hard in tennis and other games
First Known Use of SMASH 1764

smashing _^adjective: very good or impressive
1: that smashes : crushing a smashing defeat
2: extraordinarily impressive or effective a smashing performance
First Known Use of SMASHING 1825

Etymonline states clearly that smashing meaning "pleasing, sensational" is from 1911. While smash meaning "great success" is from 1923

It's Not Tennis

I don't believe smashing derives from the famous tennis shot. In tennis a smash is a ball hit with such force, speed and power that can leave the opponent "defeated", inasmuch as the player fails to return the shot. Smash is onomatopoeic, it describes the sound of the ball hitting the ground, metaphorically it "shatters" the court. From the website, The History of Tennis—The Origins of Tennis, we learn

1880 ▪ BIRTH OF OVERHEAD SMASH ▪ The overhead smash was introduced into the game for the first time in the history of tennis by the Renshaw brothers in Wimbledon. They would dominate Wimbledon for a decade, winning all but 1880 and 1887 championships between them in the history of tennis.

Smashing

The 1919 edition of the Oxford English Dictionary [link] has no record of smashing meaning sensational, wonderful or excellent. Instead its authors defines it as being a verbal substantive (vbl.sb) formed on the meaning of the verb smash

Smash v.¹ [Probably imitative: Norw. dial. smaska to crush, slaa i smask to knock to smash (Ross).]
2. To break (anything) in pieces violently; to dash to pieces; to crush, shatter, or shiver.
3. To dash or fling (anything) with noise and violence; to batter; to cause to strike hard.

Smashing vbl.sb. ¹ [f. Smash v.¹] 1. The action of SMASH v.¹ in various senses

The noun smash is described as being dialect or colloquial: A hard or heavy blow

There's no mention of it meaning a success. However, the OED 1919 edition has some information on the noun smasher

I'll just go ahead and post an answer (same as Mari's) since I want to express it slightly differently.

(Point 1) Note that "smash box office records" was a term used in the entertainment business to mean "break box office records". (Just TBC if you are a non-native English speaker, "smash" is a synonym of "break".)

(Point 1B) Regarding the timing of "smash records" in the entertainment industry, I'm going to go ahead and guess since the 1920s[1]

Indeed, Merriam-Webster asserts 1923...

http://www.merriam-webster.com/dictionary/smash

(Lucky guess by me!)

(Point 2) From "smash records" people were soon saying: "smash hit" or just "smash"

(Point 3) PURELY IN MY OPINION - I'VE ALWAYS JUST ASSUMED THIS, the general use of "smashing" (synonym of "good") comes from this use of "smash" in the entertainment industry.

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[1] my authority on that statement is that: I have read Julie Andrews autobiography, Home.

I believe the actual stem is an anglicised version of the Irish term 'ag smashalach' which means the same general thing and exists in Irish literature from the 1300s. That is an incorrect spelling of the Irish term as I haven't actually studied the language in 5 years.

's math sin is a Scottish gaelic phrase that means "Great!". It literally means "that is good" and is pronounced shih-mah-sheen. It is possible that smashing comes from this phrase.

Is 1858 long enough ago to claim an earliest usage of "smashing"?

Just when you thought "smashing" in the sense described wasn't used before 1911, The Coopers' Journal Volume 21 (September 1905) (page 241 of the scan) shows an advert with the slogan "A Smashing Trade", and the text

I don't think anybody is doing a smashing trade in slack barrel stock at present, but I think I am getting my share and maybe a little more.

And in 1901, volume one of Gail Hamilton's Life in Letters was published,including (on page 154) the following extract:

They are English, at least he is - house full of pictures, engravings, etc., and oh, my! father, they had a smashing fire in the parlor and another in the dining-room, I believe, and more than all, a smashing fire in the entry and nobody anywhere near it.

On closer inspection, it turns out that that passage comes from a letter written on Feb 15th, 1858. I am not yet entirely certain whether the book is a compilation of genuine letters, or a work of fiction. Can anyone advise? Either way, we have 1901 or 1858.

Both these extracts seem to go against the suggestion that "smashing" is a purely BrE word. I would assume that it has simply fallen further out of favour in the USA, while we Britons continue to cling on to some older, and perhaps more quaint, superlatives.

It came from the gaelic irish, which is said is mash sin or pronounced in english iss mash shin which in old irish means very good, great, or something of great significance etc. Originated from irish immigrants to the UK and has transformed into smashing.

http://www.smo.uhi.ac.uk/gaidhlig/cananan/beurla/faclan.html

would this suffice as evidence. there are several words borrowed from celtic languages to modern day english, not all of these will be in the dictionary. Likewise I'm not sure you could find "evidence" of these phrases originating in gaelic speaking areas - like scotland and ireland. There was also large population movements from rural areas of scotland to other parts of the UK, northern US and austrailasia, so if this expression crops up in oz, NZ and canada I think this would add weight to this argument

"Smashing" is a bastardized version of the Irish phrase "Is maith sin," which means "that's good." It's pronounced "iss MAH shin" or "iss MY shin," depending on where in Ireland you are. The Brits appropriated it ;)

Source: I speak Irish. If you want "independent verification," you can pick up any beginner's book for learning Irish - Buntús Cainte is one that comes to mind. Or, you can simply believe the several different commenters here who have pointed to its Irish meaning and origin (except for the person claiming that "ag smashalach" is a thing - methinks this was an Irishman taking the piss for a bit of craic, haha). The person who says it's Scottish is probably correct as well - there's a fair amount of crossover between these two branches of the language, only the pronunciations tend to be different.

Another source:

https://www.bitesize.irish/blog/the-irish-you-already-know/

Smashing! (an exclamation meaning “that’s great!” or “that’s wonderful!”). From Is maith sin (Iss MY shin or Iss MAA shin), meaning “that’s good.”

Early figurative occurrences of 'smashing' as an adjective

With regard to early instances of "smashing" used in a figurative sense—specifically in the sense of "whopping" or "bang-up" (that is, variously, "forceful," "very large," "impressive," or "successful")—an Elephind search of various U.S. and Australian newspaper databases turns up ten unique instances from the period 1835–1840, all from U.S. newspapers. Here they are.

From "The Pound of Pig Tail," in the Alexandria [Virginia] Gazette (December 10, 1835):

Some few years since, a letter made its appearance, said to have been written by an honest sailor to his old Father. If our memory serves us, it ran something in this form:—

On Board the Thunderer at Spithead—

Dear Father,

We arriv 10 days ago—and I haint had no time to go and see you and dear mother—I want a pound of pig tail—please send it by bearer—I am sorry I cant see you but dont you forget the pig tail—I hope mother is well and these few lines will find you in the same state of health: the best pig tail is at 7 dials—on the starboard hand next the corner—Lord Dundas is our brave commander, and the Thunderer is a smashing ship—if you cant get a pound of pig tail send half a pound—and the rest next time—give my love to all enquiring friends—and send the pig tail without fail.

The reference to "Lord Dundas" indicates that this letter was supposedly written by a British sailor, although no details about its source are included in the item beyond the writer's name ("John Grumit").

From "Jonny Bull Douglas at His Old Tricks Again," in the [Haverstraw, New York] North River Times (April 1, 1836):

The above [excerpt from an article in the Brooklyn {New York} Star] reminds us of one of Bull's tricks while he printed a paper here. It appear Bull was to have fifteen dollars, cash in hand, thirty new subscribers, for which two persons were responsible, and to receive the party printing as payment for coming out with a Van Buren paper. In order, therefore, to swell his income, Bull charged all the calls for party meetings at two cents per name, for each insertion ; and one of the party, on taking in a call signed by twenty persons only, was a little surprised to see it come out the next day with six hundred signatures prefixed to it. Bull is a smashing democrat, and a clean Van Buren one too.

From "Important to Emigrants," in the Leavenworth [Indiana] Arena (September 13, 1838):

The lands bordering on the Wisconsin river are exceeding rich, and the depths of the soil in some places is almost incredible. Several towns thus situated on the banks of the Wisconsin, were lately laid off there, and as the canals will be finished in less than two years, the proprietor of those towns will do a "smashing" business, particularly as the surrounding country is filling up with the most astonishing rapidity, that one who had not seen it would scarcely believe it.

From "English Literature," in the Alexandria [Virginia] Gazette (April 19, 1839):

Lockhart has published a smashing reply to the pamphlet by James Ballantyne's son, charging him with gross mispresentations of J. Ballantyne, in the life of Scott. This in the form of a letter to Sir Adam Ferguson, and is called "The Ballantyne Humbug Handle." A reply is threatened.

From "Humbug," in the [Cincinnati, Ohio] Catholic Telegraph (May 23, 1839), reprinted from the Cincinnati [Ohio] Daily Sun:

The Right Rev. John N. Maffit is doing a smashing business up town, in the way of converting poor little pagan milliner and seamstress girls, from the error of their ways, to a new and glorious species of christianity. A new species of christianity we call it, for it differs from any which the world has heard of heretofore. I forms another and a very remarkable development of the grand revolutionizing spirit of the age, of which we have so often spoken before. John's Christianity is a mixture of animal magnetism and superfine essence of humbug.

From "A Monstrous Bear Story," in the [Gettysburg, Pennsylvania] Star and Republican Banner (January 27, 1840):

Going out to fodder the cattle the next day, I discovered that fresh [bear] tracks had been made from my barn up to the mountain. I cut off, full split, to see what the big trap got for breakfast—never once suspecting tat the old bear would be such a fool as to get caught—but expected to find nothing more than a cub, at most.—I crept along towards the top of the ledge, hoping to draw a smashing prize ; but, as I said before, I could'nt, for the life of me, suppose that it would be my luck to catch a black monster of 800 pounds weight.

From "A Smashing Business," in the Alexandria [Virginia] Gazette (March 9, 1840):

A New Orleans paper, in praising a new steamboat, says, "she is destined to do a smashing business, both in passengers and in weight." The Western boats are rather too celebrated already for doing this kind of business.

From "Mr. Jonathon Slick's New Year's Calls," in the [Bloomsburg, Pennsylvania] Columbia Democrat (March 28, 1840), reprinted from the New York [City] Express:

I made a leetle inquiry about how people did a New Year's day and found out that it was the fashion to set out things, and treat every body that comes to see you. So early in the morning I put on clean linen, to make my calls in.

I hadn't but just got to the door, when my pusey cousin driv up; so I got into the carriage, and off we went, down Broadway, at a smashing rate, till at last we stopped a fore one of the neatest-looking houses that I've seen in York; it warnt crinckled and finefied off with wood-word and iron fences, but the hull was solid stun.

From "Log-Cabin Raising," in the [Pontiac, Michigan] Jeffersonian (April 28, 1840):

Next came an immensely large boiled ham and a large wooden tray full of boiled potatoes Then followed a smashing great kettle full of baked pork and beans, accompanied with rye and Indian bread—then two pails of Sour-Crout—then a half bushel of nut-cakes—then a lot dried beef—then an old fashioned SHORT-CAKE—then a hundred boiled eggs—then a variety of little fixins'—and finally a large jappaned tea tray full of old fashioned pumpkin pies, the bare sight of which would make a hungry loco foco cry for joy. For plates they used clean pine shingles—for chairs wooden blocks.

And from a letter dated May 29, 1840, from "a Whig" to the editor of the [Brookville] Indiana American (June 5, 1840):

I suppose the Judge [Johnson] has forgotten the time he made the stump speech in our township, the time he was a candidate for the Legislature, there he stated that he went in for rechartering the old United States Bank on the old plan, and that he went for internal improvements, and protective tariff, then the party that now claim to be democrats could not swallow him at all, no he was a monster, had he been ever so well greased with soft soap, as they call it, they could not have hot him down, but now the same fellows can go him easy, he is the simon pure, he never done any thing but what was truly democratic. But let us return to the Judges speech again, I thought from the size of the files of old newspaper and pamplets, and reports of committees of Congress, that the Judge had collected matter enough to make a smashing speech, and so it turned out, for his own party was deceived, for some of them said they thought the Judge was smarter than they found him to be, some thought every thing safe and went to sleep, others sat and swallowed it, with the expectation of finding the better end of it, but it was a mixed dose of dog fenel, pokeroot and lobelia.

Earlier than all of these instances is a Google Books match from J.E.A., "Sharks," in The Naval and Military Magazine (London, July 1828):

Shortly after [an episode involving a remora attaching itself to a sailor's back], a breeze springing up, the vessel was swelled to her utmost dimensions, and gracefully yielding to the press of her canvass, not many days after, with a smashing breeze, we brought up with a round turn and belay, in our destined haven.

This article identifies J.E.A. as someone affiliated with the Royal Military College and gives the date of authorship as March 1828. It is striking that the two earliest instances of smashing in two of the senses traced in this answer come from sources associated with the British navy.

The preceding examples use smashing in a number of figurative senses but the predominant ones are "very large," "very impressive," "very successful," "very effective," and "very forceful."

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A side note on 'smasher'

The noun smasher seems to have carried a sense related to that of the adjective smashing, to judge from this entry for noun in John Bartlett, Dictionary of Americanisms (1848):

SMASHER. A low word denoting anything very large, or larger than another of the same kind. It is used in the same sense in the North of England.—Brockett's Glossary.

Put up your benefit for that night ; and if you don't have a smasher, with at least six wreaths, say I don't understand managing the theatres.—Field, Drama at Pokerville.

The reference to "Brockett's Glossary" is to John Brockett, A Glossary of North Country Words, in Use (1825), which has this entry for smasher:

SMASHER, a small standing pie, or raised tartlet ; generally made of gooseberries.—Newcastle. This word also means any thing larger than another of the same sort. ...

Subsequent editions of Brockett's glossary, beginning with the second edition (1829) report that "a smasher signifies necessarily something big," but Brockett is specifically talking about smasher as used in coal pitman talk.

The instance of smasher that Bartlett cites from Joseph Field, "The Drama in Pokerville" (1847) involves a banquet being arranged for one character by her husband.

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The origin of 'smashing' as 'very good'

Few changes in the meaning of a word would be less surprising than the evolution of a word that meant "forceful" or "unusually powerful" to "exceptionally large" and thence to "impressive," "successful," and ultimately "very good." Instances of "smashing" in the sense of "forceful" or "effective" appear in the context of boxing matches date to the late 1810s. For example, from "Battle Between Eales and Hall," in The Sporting Magazine (London, November 1818):

[Round] 2. A smashing round commenced offensively by Hall, who dropped claret profusely from the forehead. Several counter hits were exchanged in a gallant rally, after Hall had returned upon and parried Eales's right hand The blows wee measured with such precision, and the parries were so expert, and it was so much a master-piece of fighting altogether, that a common observer could not tell who had first got into the chancery line. Eales was hit hard on the left jaw, and both went down in a close tired with exertion. Even betting.

And from "Refinement," in the Alexandria [Virginia] Herald (February 18, 1822), reprinted from a London source:

Boxing — The battle between Bob Nelson, the chaunting drover, and Sam Sims, the Warminster tinman, was faught on Wednesday, on Farnham Heath, after having had notice to quit Surrey.—It was a short but merry smashing combat of four rounds of hard work ; occupying fourteen minutes.

Both opened-mouthed and piping, like a race horse after a four mile heat, the combatants were too tired for quick work. Nelson made the play, and a smashing rally followed : Sims was hit down, and Nelson was the favorite. [Round] 4. This round gave Nelson a quietus by one of those unlucky hits which belong to the Gas and Randal. Nelson was making the play when his adversary place a righthanded hit upon the jaw, which unlocked it, and won him (Sims) the battle. Both were much punished.

Instances of the phrase "smashing good"—where "smashing" seems to function as an intensifier along the lines of "very" or "extremely"—appear in Elephind results starting in the 1870s. From "A Slight Adventure," in the Ashtabula [Ohio] Telegraph (May 7, 1875):

"And what is to hinder your joining me in a fortnight fishing's and gunning I should like to know, old man. Com[e], you must go; its capital sport, and you can run over to Cape May and bring your sisters home in September. I'll guarantee a smashing good time if you go with me."

And from an untitled item in the [Sturgeon Bay, Wisconsin] Door County Advocate (June 15, 1876):

Do you want a smashing good sewing machine, at prices that are from 30 to 40 per cent. cheaper than those offered by other responsible agents? If you do, and really mean business, call and see me, and I will convince you that I am not "gassing," but mean just what I say. Do you understand? I have sold upwards of twenty of the Weed Sewing Machines—the machines that I represent—in this neighborhood, within the past month, which is sufficient guarantee that the Weed is equal to the best machine sold.

But instances in which smashing clearly seems to mean "very good," "fine," or "excellent" date back just as far and perhaps even farther. For example, from "Worth of Money," in the [Warren, Ohio] Western Reserve Chronicle (March 11, 1863):

The young "Crack" sees in his money a skeleton wagon, and a fast nag, a rousing trot, a jolly drink, and a smashing party.

But many and many a weary soul sees in every shilling bread, rent, fuel, clothes. There be thousands who hold on to virtue by bands of dollars; a few morre save them; a few less, and they are lost.

From "Gala Night at the Melodeon" in the [Virginia City] Montana Post (January 5, 1867):

This place of amusement, which has been closed for a few nights, to make improvements on the stage, re-opens to-night with a splendid bill. Harry Taylor has been engaged for a brief season, and makes his first appearance this evening, while the entire company are cast for a "smashing" performance. ... With all these preparations for a good time, Con. deserves a good house. Give him a bumper.

And from Mary Holmes, Edith Lyle (1876), published in serialized form as Edith Lyle's Secret in the Maitland [New South Wales] Mercury (November 14, 1874):

Julia bowed, while Godfrey dropped his fork and almost hurrahed in his surprise. He knew what a Church Sociable with sponge-cake and cream meant; he had attended more than one in Hampstead, and danced with every girl there, and every forlorn, neglected woman who wanted partner, but he had never dreamed of bringing the mixed assemblage across that aristocratic threshold, and lo it was coming without his aid, and he was delighted, and he invited every man, woman and child in town, and came to me with a beaming face and told me the good news, and asked if I would play the piano for them, and said he would get two or three musicians to accompany me and have a "smashing time."

Holmes was an American author.

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The Irish origin hypothesis

With regard to the proposed Irish origin of smashing in the sense of "very good," I note this entry from Tom Dalzell & Terry Victor, The New Partridge Dictionary of Slang and Unconventional English (2006):

smashing adjective fine; excellent; possessed of great charm; large[.] UK, 1911 It is often claimed, improbably, that this derives from the Irish phrase is maith sin (that's good).

The derivation from the Irish phrase is unlikely in the first place because smashing was already in widespread use in English in earlier senses that were distinctly unlike the specific meaning of the Irish phrase ("that's good")—and yet not so distant from it that they might not reasonably have evolved into a similar meaning ("very good") independently of the Irish phrase. In this regard, it seems worth noting that a great many English words may be used figuratively as adjectives to convey the meaning "very good."

Chronologically, recorded use of smashing as an adjective in English suggests movement from smashing in a literal sense to smashing in various figurative senses such as "forceful," "impressive," "unusually large," and "successful," before eventually reaching the figurative meaning "splendid" or "very good." If "is maith sin" has no relevance to usage of smashing in those earlier senses, the only way it could be responsible for smashing in the sense of "very good" is if it made the jump from Irish to English in the middle of the nineteenth century, at a time when figurative use of smashing in English was already radiating in multiple directions from its literal origin. As a way of explaining how smashing came to mean "very good," meaning in question, the Irish "is maith sin" origin hypothesis seems both unnecessary and improbable.

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Conclusions

I think it is highly likely that smashing in the sense of "forceful or powerful" and in the sense of "large or impressive" emerged first in Britain but soon afterward crossed the Atlantic to North America. As noted above, the "forceful or powerful" sense of the word seems to have arisen in figurative usage in the context of boxing and the "large or impressive" sense shows tantalizing signs of having arisen in the context of the British navy.

The question of where the "very good" sense of the word first arose is less clear. The earliest examples I could find were from the United States, but I don't have access to British newspaper archives that might yield early examples similar to those from the U.S. newspaper archives cited above. It is nonetheless noteworthy that a number of examples of this usage do appear in nineteenth-century U.S. sources, given that most English speakers today (I suspect) who have any opinion on the matter would characterize smashing in the sense of "very good" as a thoroughly British form of expression.