On July 11, 1973, Varig flight 820 The plane, which departed from Galeão Airport bound for London with a stopover at Orly Airport (Paris), crashed moments before landing in a field near that airport.
From Wikipedia, a photo of the plane after the crash.
Minutes before arrival, a fire broke out in the bathroom. Attempts to extinguish the fire were ineffective, and it spread throughout the aircraft. Smoke even entered the cockpit, forcing the pilots to make an emergency landing. Of the 134 occupants, 123 died, with only one passenger among the survivors.
Interesting story number 1 - The flight commander was decorated for managing to divert the aircraft away from populated areas around the airport.
Interesting story number 2 - The surviving passenger, after about a year, complained about the incident at a Varig store and requested another ticket to reach his destination (claiming he was entitled to it, given that the plane did not arrive). This ticket was provided by Varig.
Later, it was understood that the most likely cause of the fire was a cigarette butt thrown into the trash can in one of the bathrooms. As a safety recommendation, smoking was prohibited in airplane bathrooms, and the installation of ashtrays in certain areas of the cabin became mandatory. These ashtrays are still mandatory today, providing a safe place to dispose of the fire hazard should someone manage to light a cigarette.
Back then (1970), smoking was more glamorous than it is today, so this accident probably already raised some concerns about the risks of smoking on board an aircraft. For a while, there were only a few isolated initiatives (apparently United implemented a no-smoking section in 1971), until in 1988 smoking began to be phased out until a general ban in 2000 (that is, well after the accident).
One of the main reasons for the smoking ban was health concerns. Secondhand smoke unfortunately exists and is a problem (which is probably why smokers can only smoke outdoors nowadays).
Another problem with allowing smoking on board, which I remember hearing about in a video from Aviões e Músicas (an excellent channel for aviation topics, by the way), is that the nicotine ends up impregnating components of the air conditioning system. It was probably something similar to a smoker's car – it's difficult to get rid of the cigarette smell. Perhaps this was taken into consideration.