That's a good explanation, by which I'd like to explain the cultural difference. You would acknowledge me with a nice smile... but if I'm just passing you on the street, there's no need for you to acknowledge me. I'm just a stranger. You wouldn't even remember me for 5 minutes. So for you to beam at me, nice as it is, is a tiny little bit startling. It's as if a passerby yelled "HEY!" at your face, but smiled and kept walking. Leaves you feeling not necessarily more at peace, but like "what? uhh, that's nice I guess?"

On the other hand, the social norm here is akin to respecting other people's privacy and social circle. If you're a friend, then of course, I'm happy to see you. But as for strangers, we're kind of leaving them the option not to become a part of someone's social sphere. I don't think less of you if I don't acknowledge you with a smile, I'm just recognizing that we're strangers, we respect eachothers privacy, don't try to mug into each other's social circles, and that's fine. Coming from America you might get the impression that people are cold, but it's just a different social norm.