If you want to smoke food (BBQ, etc) avoid kiln dried wood. It's too dry. You want dry wood but you generally want some level of moisture (15%-20% is often good, more in some other styles) in most of your wood.
Many folks soak the chips in bowls of water
Use wood chucks. After thinking about it, I’ve never thought my wood chunks were too dry but I used to think that a lot about wood chips. Wood chips burn much faster so it makes sense.
I have a hard time not getting it to burn hot and without smoke regardless of form factor if the wood isn't somewhat wet.
Can always toss in some charcoal to compensate if it's too wet. Kind of hard to do much if it's too dry.
You can also put the kiln dried wood outside (but covered) for a few weeks. It will reabsorb enough moisture from the air to burn normally.