Hello,
I’m trying subdivide torus with Smoothness =1 and can’t get good result
Want to get nice smooth lines but get this
What I’m doing wrong?
Try adding a subdivision modifier and apply it
It does the same thing with 2.79, it’s how it works 
With subdivision modifier it’s ok.
But if I need to subdivide only this loops
I get this result
So it’s a bug from 2.79 and no one interested in it?
I really do agree that it’s a strange behavior from a user perspective, I would also wish the function to be able to produce a round result. But, there is nothing that says it should produce the result you are after: https://docs.blender.org/manual/en/latest/modeling/meshes/editing/subdividing/subdivide.html so it’s hard to file as a bug.
On the other hand, you could select each circle at a time and use loop tools -> circle, that would probably fix it. Just takes a couple of more clicks.
One way to workaround Smoothness option not smoothing out vertices could be using Cathmull-Clark Smoothing addon to apply it on already existing surface and make it look as if it was created with Subsurf.