During 60's to 70's smoking was not prohibited. However, every rule and prohibition depends on safety, prohibition of smoking on aircrafts also commits to safety of flight. Smoking is a big crime on planes, if there are couple of attempts to smoke on a flight that`s considered as terrorist act, at that point whoever tries to smoke are accused as terrorist. Pilots land aircraft to closest airport and police takes suspects from aircraft.
Possibility of fire is main reason for this rule. Seats or floor could catch fire from cigarettes. Even if you smoke lavatory, it is a lot more dangerous because there are lots of paper towels and etc. that catches fire in lavatories.
Even if some special cabins has been built, there are still risk of fire because of inattention or terrorist could try to burn down the aircraft.
You could say that if somebody tries to burn down an airplane they could use lavatory to that. Because of this aircraft lavatories are equipped with smoke detectors.
Essential of aviation rules to ban everything that could not be controlled up in the air.