David Luiz is most certainly better than Smalling. Luiz got into Team of the Year at one stage. He might not be a leader in defence but every team would start him. His ball playing ability is second to none. And his actual defending gets underrated because of it.
Is Smalling better than Lovren and Matip? I'd say they're probably on par. Lovren got to a World Cup and Champions League final in the same year though. That would never be accomplished with Chris Smalling in defence.
Defenders in the top 6 I'd have over Smalling...
Laporte, Otamendi, Kompany, Stones
Alderweireld, Vertonghen, Sanchez
Van Dijk, Gomez
Sokratis, Koscielny (when fit)
Luiz, Rudiger, Christensen
All of these are either better players than Smalling, or have a much higher ceiling than Smalling.
Having said that, he would probably start for Arsenal.