There are many ways, methods, and techniques for stitching smooth knit seams. These vary by fabric type and machine tension. Some machines will be equipped with speciality stitches that stretch a fabric during the stitching process, and if your machine has this setting, you should use it for knit fabrics. It's usually marked as a knit setting on the sewing machine or in the manual that came with the machine. This setting will allow you to create smooth seams.
But what if your machine doesn't have this very specific setting? You can still get decent seams on your own sewing machine. Try using a longer stitch when sewing the seam, but make sure the fabric doesn't stretch while you're doing it or you'll end up with a bunchy seam. Don't try to mimic the knit setting if your machine doesn't have it. Work with what you have instead.
You might also try a very narrow zigzag stitch (which is my favorite alternative) or using a serger if you have one. Test the various methods on scraps of fabric to determine which is the best for the specific fabric you're using. Remember that all fabrics are a little different, so always do a little test run before working with your actual project.
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