Hourihane was denied a second goal in as many games for Villa as the Irish international seemed to have restored parity against Brighton before the break.
Though after the home celebrations had finished and the ball was placed back on the spot for the Seagulls to restart, referee David Coote was given the order to award a free kick against Wesley. The Villa forward was adjudged to impede Mat Ryan's attempt at claiming a cross.
Smith criticised VAR in his post match comments, even though his side left the field with three points thanks to a late winner from Matt Targett. Villa have now won three league games this season.
Smith said: "We scored a perfectly-good goal. It takes what felt like an age to disallow it and, in my opinion, it should not have been disallowed.
"Wesley gets up early above their goalkeeper. He was going to make contact with him because he challenged for the ball and Mat Ryan's flapped at it.
"Everybody in the ground is celebrating. Brighton are ready to kick off and then, for the first time I believe this season, VAR has got involved in a subjective decision."
Villa's head coach admitted: "I was frustrated with VAR. The decision to give a yellow card and a free-kick to their goal, as well. The supporters let everyone know what they felt about it. In my experience, it's not been a great one.
During the second international break of the season, Premier League managers were made aware by league officials that dubious decisions would not be reviewed with the scrutiny first applied at the start of the season.
Smith said: "I must have missed the memo during the international period that we were starting to do that. It takes a little bit of fun out of the game now.
In light of an overall disappointing Villa performance, Smith was keen to remember a run of poor decisions that have cost Villa points this term.
"We probably didn't deserve all three points today but it's three points we deserved in previous games. I'm certainly not going to take that away from the lads. Brighton are a very good team, Graham coaches them very well but we weren't very good without the ball today."
Villa travel to the Etihad Stadium next Saturday as they face champions Manchester City at 12:30 BST.