جَاءَ خَالِدٌ وَهُوَ مُبْتَسِمٌ.
Khalid arrived while he was smiling.
The pronoun in wa-huwa mubtasim refers to Khalid and describes his state during arrival. This supports a circumstantial clause (jumlah ḥāliyyah). Contrast:
جَاءَ خَالِدٌ وَوَصَلَ أَخُوهُ.
Khalid arrived, and his brother arrived too.
The second reports another person's action, not Khalid's condition at arrival. Wāw alone does not identify a circumstantial relation; one must locate the ṣāḥib al-ḥāl and the temporal relation between the event and its qualification.