Can somebody help me out by guiding me in actual smoothing the edges to make it look like a polygon. Im using Arc Map 10.2 and also except answers for QGIS and ILWIS Software.
Whatever the toool used, you need to resample your raster to have more pixels (therefore having a smaller pixels size) before vectorisation. Considering you have already classified your data as suggested in the comments, the resampling will give you visualy smoother angles at the same scale as displayed.
You can also merge classes to get more homogeneous areas, therefore having less smaller micro-areas.