Yesterday, we explored Smooth. That's a funny word. Smooth. But I digress.
Here's another way to achieve a similar look.
Select the Rectangular Marquee tool.
Draw a rectangular selection.
Choose Window > Channels
The Channels palette apears.
Click the "Save selection as channel" button, found at the bottom of the Channels palette.
An Alpha channel that represents your selection is created.
Choose Select > Deselect
Activate the new channel by single-clicking.
Choose Filter > Blur > Gaussian Blur.
The Gaussian Blur dialog box appears.
Enter an Amount value to blur the selection.
Select Image > Adjustments > Levels
The Levels dialog box appears.
Drag the Highlight and Shadow Input sliders towards the center to "sharpen" the channel edge.
The corner are smooth and sharp.
Click the "Load channel as selection" button found at the bottom of the Channels palette.
This may seem like a long path to the same results as Select > Modify > Smooth, but stay tuned for a twist on this technique that I'll show you soon. By approaching Photoshop from different angles you'll begin to see how the tools and commands are inter-related allowing you to leverage their power to your best advantage.