I think the functionality might be broken. There is a workaround solution, though: if you first add the Tidal track to library and then rate it in Plex, the track will add itself to your smart playlists.
I’m not sure it does much of anything We sent it over to our cloud, I think we store it, but beyond that I’m not sure. We’d actually talked about making a playlist called “TIDAL tracks” which we’d add to when you highly rated a TIDAL track to work around that issue.