I've been using hashtags on my Notes for years. Not sure how new Smart Folders are, but I just created one based on a hashtag I use constantly. The Smart Folder isn't aggregating these hash tagged notes. Not sure why.
MacBook Air 13″, macOS 12.2
When I add a Hash Tag in a Note it's on it's own line and hitting return turns the tag to a blue color. If that isn't happening and it remains plain text, perhaps you are using a restricted word or the hash tag isn't on its own line. Or perhaps you need to delete the Smart Folder and tag(s) and recreate the Smart Folder and then add the tag without the # sign and it will be created as a tag with the # prefix.
When clicking the Tags buttons they can be used collaboratively by clicking more than one Tag you are searching for Notes that have all those tags. Showing only those notes that have both #Tag1 and #Tag2.
After deleting a Smart Folder / Tag I had to remove the #Tag from the note and retype it for it to change back to a blue object then the searching worked.
Smart Folders not aggregating hashtags
