A lot of subs have some built-in EQ, such as a one-band or maybe three-band manual EQ control. For those units, it probably makes sense to disable it and let Audyssey work on its own. The SMS-1 is a somewhat different case, though, which is probably why it was addressed separately from built-in sub EQ's:
Additionally, some systems may have outboard subwoofer equalization equipment (such as a Behringer EQ or Velodyne SMS-1) connected between the PR-SC886 and the subwoofer. The signal processing performed by these units can produce a signal delay, and the Audyssey measurements will perceive that delay as a greater distance from the listening position. As a result, these systems will cause the measured subwoofer distances to not match the actual speaker placement. We recommend retaining the Audyssey-measured distances, as they include delays for both physical distance and for signal processing. For subwoofers with equalization built in, we also recommend disabling that equalization and using Audyssey alone; in most cases Audyssey will provide superior results.
So based on that, the manual doesn't suggest that Audyssey is better than the SMS-1. Instead, it recommends that anyone who uses an SMS-1 should set the SMS-1 up first and then run Audyssey afterward. Using that sequence allows Audyssey to work in coordination with the SMS-1 rather than fighting against it.
I've tinkered a bit with the combo of 885 and SMS-1, and with the 885 on its own. My room is hardly a perfect acoustical space, but it's surprisingly well-behaved for a den that doubles as a home theater. As such, neither the SMS-1 nor Audyssey were as profoundly effecting as they can be in other circumstances. That's probably why the 885's Audyssey by itself doesn't sound much different from the 885/SMS-1 combo. I could still see cases where it's worth keeping the SMS-1 around, assuming that it is set up in the sequence described by Outlaw's guide.
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