In the first round, Smith looked in trouble as Le knocked him down and landed punch after punch. McCarthy got in close and saw that Smith was still surviving. A lesser referee may have stopped the fight at that point, and not allowed Smith to continue. That, of course, would have kept Smith from pulling out the third-round win.
Referees have the tough job of deciding whether a fighter is healthy or not, knocked out or not, able to continue or not. Boxing and MMA referees have more to do with who wins and loses than in most other sports. If a football referee makes a mistake, it can affect the outcome of the game, but it may not.
That's not true in MMA. If a referee calls the end of a fight too early, a fighter will not only lose unfairly, but could lose the "win" part of his purse. If the referee is too late to stop, the fighter could be injured. Outside of Orlando Brown, a football referee's actions are unlikely to injure a player.
That's what makes the Nevada State Athletic Commission's waffling on McCarthy's application to ref in their state so puzzling. The man is a good referee. He's not perfect; he seems a little too concerned with his own fame and he's made some enemies in the world of MMA, but that doesn't seem to affect his ability to officiate a clear fight.