When I was a beginning film student I was really worried about smooth cuts. I couldn't figure out why Hollywood movies were so smooth compared to all the student films at Montana State and I thought smooth cuts were key to keeping the viewer engaged and a key to quality filmmaking. (Little did I know that years later I would end up cutting music videos where jump cuts were preferred). Anyway, as it turned out the answer was simple but also complex. It was simple because the secret to a smooth cut was just telling a good story. But it was also complex in that there were a lot of small tricks one could use to distract the viewer so that the cut itself didn't distract from the experience of the film but enhanced it.
For a long while I was obsessed with where the eye was looking in the frame. I tried to figure out every shot ahead of time to design where the viewer would be looking - the center of interest - and shoot every shot in a way that would direct it. I used to carry around a small piece of plexiglass and a red pen so I could show my DP where I wanted it. Eventually I figured out good composition would mean there was something on the upper right or upper left third most of the time to intercept the eye. So I stopped trying to force it. But it's useful knowledge sometimes when some cut that should work doesn't.
One day I was watching The Road Warrior and I realized I was mid-blink whenever there was a cut, meaning my eyes were closed during the transition. Wot?? This was before Walter Murch's book In the Blink of Eye. (Props to Walter the genius.) I couldn't figure how the editors, there were three, knew when I was blinking. I'm still not sure how they knew. I've worked out my own technique but other than what Walter says I have no idea. I'd like to ask one day. (BTW, It's a function of pace and what the actor is doing or the moment when the viewer changes focus or assimilates an idea). I suppose it could also be that George Miller was having the operator frame everything in the center as he purported to have done on Fury Road. Maybe.
One thing that always bothered me were match cuts. You know those times when you want to cut to a wider or tighter shot on some move of the actor. Those cuts always seemed painfully obvious to the viewer. Somewhere along the line I discovered the cut improves when you advance the action slightly across the cut. You cut away on the move the actor makes but instead of picking up the incoming shot where the movement matches you go past it. I don't know why it works but it does. Maybe it's because the viewer appreciates brevity even if it's only frames. Sometimes good cutting is all about a little bit of cutting to what matters and ignoring matching altogether. Of course there are blatant mis-matches that are impossible to reconcile - one of the end scenes of Fatal Attraction comes to mind... But still, the lesson is the audience appreciates economy.
One trick I learned from another editor: Sometimes in the interest of efficient story telling you need to put together shots that just won't smooth out and are obvious to the viewer, his solution is to put three short cuts together which match in length. If you think about the cuts when you watch, the cuts look jumpy but if you put yourself in the mind set of the viewer and the story, those lousy cuts go by like a hot knife through butter -as long as they are during an interesting conflict in the story that is.
My favorite is a cut which is an answer to a question in the mind of the audience. It can be an obvious cut or an ugly cut but the viewer will love it if it answers their question in a humorous way.
The best way to distract the audience is to have something going on in the story which creates another layer, in other words, subtext. Shakespeare used a device all the time, like Polonius eavesdropping behind a curtain, which created a level of reality beyond the artifice of the play. If you invoke the imagination beyond what is in front of the audience they forget about the fakery. Inception is a good example of this idea. When there is subtext, the viewer spends part of the time thinking about what they can't see and when that happens the illusion of reality is complete.