Being smart and skilled isn't enough. Some examples:
Two ADFA graduates I knew, both with significant GA experience: one failed during BFTS; the other during 2FTS
Another student failed a re-test of the final sequence at BFTS. I later worked with a friend of theirs and was told the student was so stressed that failing the flight (and the course) came as a huge relief.
And another student was back-coursed because of (rumour had it) his 'attitude' toward instructors