It will override any local ordinance which would have prohibited landlords from discriminating against smokers and also sets a precedent that allows landlords to actually exercise discrimination based on behavior. It is a recognition of the property rights of landlords.
Although it may have no practical effect it is a step in the right direction taken, no doubt, by a legislature that had no intention of doing so.
The only direction this is going is to advance the war on smoking. As you have noted, the CA legislature does not give a rip about property rights, they have banned smoking in private establishments such as bars and retaurants. If they can get away with it, they will ban smoking even in one's own home, in fact, I think there is a City ordinance in Davis that you cannot even smoke in your backyard, and apparently, no state law that prevents such an ordinance.