Can smoking really make a bone surgery fail?

Absolutely. Smoking impairs neovascularization, or the formation of new blood vessels. This impairs the deliver of oxygen and nutrients to injured tissue. Smoking can lead to failure of a bone graft as well as lead to failure of other operations such as hernia repairs.
Yes. Smoking causes the blood vessels to constrict causing less oxygen flow to the areas of the body that need the oxygen for healing after a surgery.