But i already have a set of armor and a weapon. why should i make items, especially iron daggers? I guess im looking for a legitimate way, where smithing is increased doing some useful game process. Enchant is increased by using enchanted items, Alchemy by consuming reagents, armor and weapon skills by killing enemies. Smithing only through powergaming?
No, smithing is increased through smithing, same as enchanting is increased by making enchantments. (<- not by
using enchantments)

If you want to become a badass at smithing then you''ll have to smith. As simple as that. You either have to create items or temper (improve) existing items. And there's the option to spend some coin at a smithing trainer.