This is a tough one, SuperNan60! I totally get your frustration with DIL, especially where the smoking and drinking are concerned. IMO, you're absolutely right, it is akin to child abuse. I know there are people who smoked through their whole pregnancy and so forth and their babies were born fine, but it's not fair to the unborn child, IMO, to take that chance. And I know the coming baby isn't technically a child yet. But if she wants this baby - and, apparently, she does -- how can she risk hurting him/her this way?!
Ordinarily, I'd say to bite your tongue, once again, as your partner feels you should have done. But I can't blame you for speaking up about this.
I wish you had done it in a calmer, more reasonable way. But I know you must have been feeling offended by her sitting with her back to you - how rude! And then seeing her light not one, but three cigarettes - you must have wanted to scream! She's lucky, IMO, you didn't say/do worse than you did!
Whether or not she's "lazy" in the care of her and SS' (stepson') house and kids is not your concern, as long as the kids don't seem to be neglected. Also, the fact that she' "spends most of her time" on her Iphone when you're with her doesn't mean that's what she's doing all the time when you're not around. Sorry to say, but she may be doing that to avoid you, just as she turns her back.
It's good, I think, that you appreciate how hard SS works at his job. But she may feel she's working, too (in the home, whether or not you feel she's doing enough) and that when he comes home, he needs to pitch in. Perhaps she asks too much of him or doesn't do her fair share, I know. But that's between her and SS. I know you feel for him, but how they run their home and so forth is not your call. It may be easier for you to keep your cool if you can let go of those issues that don't really concern you.
Now someone endangering a child's health - that's everyone's concern, IMO...