The smooth, satiny finish you see on professionally decorated cakes is usually achieved with fondant and buttercream. Fondant is a special type of frosting made from sugar, water, gelatin, and glycerol that has a consistency similar to modeling clay. It's malleability makes it perfect for creating those intricate designs and shapes you see on specialty cakes. Fondant is usually applied on top of a thick layer of buttercream. Buttercream is essential to the fondant's success. By smoothing any irregularities on the cake's surface, binding up loose crumbs, and concealing the cake's color, this layer of buttercream contributes significantly to the final appearance of the cake.
Your Best Option ...
The ideal buttercream for cake making purposes is one that can be applied in a smooth, even coat--this helps the fondant look smooth. However, it should also "crust" under refrigeration, forming a firm surface that won't shift around as you smooth the fondant. A simple American buttercream or confectioner's buttercream, which are made with butter, confectioner's sugar, milk, and vanilla, often provide the most practical choice. When freshly made and well whipped, it's easy to spread but also remains firm after refrigeration.
... and Your Alternatives
As you gain experience in cake decorating, you may choose to branch out and try other variations of buttercream. For example, meringue-based Swiss or Italian buttercream doesn't crust as well but can still be brought to a smooth finish. Bakers in warm climates often prefer to use icing made with shortening rather than butter, because it's more stable when warm. Another useful alternative is ganache, which is a mixture of roughly 3 parts milk, dark, or white chocolate to 1 part hot cream. Ganache sets hard and provides a fine base for the fondant.