Filthy rag is smudging party decorations (5,6)
I believe the answer is:
fairy lights
'decorations' is the definition.
I don't know anything about this answer so I can't tell whether it can be defined by this definition.
'filthy rag is smudging' is the wordplay.
'filthy rag is' can be anagrammed to 'FAIRY LIGHTS'.
Though, I am not sure how the anagram is indicated.
'party' acts as a link.
Can you help me to learn more?
(Other definitions for fairy lights that I've seen before include "electrical display" , "Tree decorations" .)