How come it's not "there he is" even though the speaker is pointing at him? Does "it" in "there it is" refer to the smile?
Yes, "there it is" is referring to the appearance of the smile here. If he were referring to the appearance or the arrival of a person, it would be correct to say "there he is". However, in this case, "it" is used because they are talking about an object instead of a person.
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