Why do people waste their time attacking the Smashville balloons and Duck Hunt birds

The amount of circle pad movement affects the amount of coins you gain after a match.

Specifically, the circle pad has to go to its neutral position before moving it again for more coins, so you can't just rotate it around. Source: Reddit thread

The point of hitting the bomb is so the bomb move faster and it does more damage to the structures before exploding. If you just hit the bomb of at about *25% it will only be able to damage the the two types of wood blocks. At around *30% percent you can start to damage the light grey stone blocks and *40% you can damage the dark grey stone blocks.

The higher the percent the better because the bomb will lose speed with every hit to the structural objects. It does not affect the bomb's explosion, just how the bomb moves.

*Rough estimates based on game play over the last few days.