There's problems with that statement. The Munich Agreement was not agreed upon at "an old palace". In fact, Chamberlain and Hitler met at several locations prior to signing the agreement, none of which can be described as an "old palace".
First, on September 15th, at Berghof, Hitler's residence in the Bavarian Alps. This was hardly an "old palace", it was a house built in 1916 and renovated just a few years before the negotiations. Smoking was allowed on the terrace.
On September 22nd Hitler and Chamberlain met again, this time at the Rheinhotel Dreesen in Bad Godesberg near Bonn. This was a hotel built in 1894, not an "old palace". As a hotel in the 1930s I can only assume they allowed smoking. This is a modern photograph, but the exterior hasn't changed much in 70 years.
The final negotiations happened at the Führerbau, at the time a very new building. It happened in this very room, Hitler's office.
Hitler himself detested smoking, but I can't find solid information about smoking at the Führerbau. I've found a great many contemporary photographs of people at the Führerbau, but none features an ash tray or someone smoking. As this was a large office building, I can only assume smoking was allowed else everyone working there would be made miserable.
There is a historically accurate deception story in the Munich Agreement negotiations.
Later in the meeting [on Sept 22nd at Rheinhotel Dreesen], a prearranged deception was undertaken in order to influence and put pressure on Chamberlain: one of Hitler's aides entered the room to inform Hitler of more Germans being killed in Czechoslovakia, to which Hitler screamed in response "I will avenge every one of them. The Czechs must be destroyed." The meeting ended with Hitler refusing to make any concessions to the Allies' demands.
It's unfortunate Mad Men chose to make something up rather than use a historically accurate story. You'd think this sort of power play would fit great with their setting.