They probably invested a little money in a decent air filter system. You can get a really good system for under $500 that will do a good job on a 25'x25' space. Denny's is probably a bit bigger than that, so they would need more filters, but I generally find the smaller 'mom & pop' operations put more effort into nice things like this, as they need to differentiate themselves fomr the big chains to survive.
I hate smoke - it really does a number on my allergies. But as long as I could get a table in the non-smoking section, and the section was actually separate from the smoking section, I rarely had any inconvenience at all.
Now, here in Tucson, they have a smoking ban in restaurants, and I think there are efforts to extend this to the county and the whole state. Its been in place a few years, and the local eateries have mostly recovered any lost business and maybe even expanded business in some cases. But with the local growth, I think they would have seen business expansion anyway.
In the end, it really is somebody saying they know what's better for you, and imposing their will. In this case, I am not personally inconvenienced (I suppose I am actually convenienced), but I don't know that makes it any more right.