The origin of the phrase is not entirely clear, but it likely comes from the idea of someone blowing smoke in order to obscure or distract from the truth. The addition of "up your skirt" adds a playful and slightly suggestive element to the expression.
Overall, the phrase "blowing smoke up your skirt" means that someone is trying to deceive or flatter you in order to get something from you. It is often used in a humorous or sarcastic way to call out insincere or exaggerated compliments or statements.