First of all welcome to FT alex2612!

For sure M&M won't guarantee that you will be able to book an award flight using fly smart. That's the purpose of fly smart awards: you get a heavy discount mileage-wise for booking on short notice for seats LH would otherwise probably not be able to sell but on the reverse side you won't get a seat if booking situation is good form LH's point of view.

I did some flights using fly smart awards (I know that it is a waste of miles from a certain perspective but sometimes it can make sense) Last time I had a FRA - BIO - FRA flight booked for me and my wife during high season. There were boths, flights in C and Y cabin available.

In my experience it is no problem to grab a fly smart award on european flights if there is more than one flight per day to the destination you want to go to. You won't probably be able to get a seat in Y but in C (as they just need to move the curtain but can charge you a higher amount of miles).

AFAIK there are two flights a day on MUC-KBP so you might be lucky and get a fly smart award. But if you need to fly on a certain day and time you'd better book a flight by paying. Again, there is no guarantee that you'll get an award using fly smart.

Hope that helps.
Greetings
totti