A great commentary on whether or not this unexpected event at the Academy Awards was staged:
Not too long ago, if the movies are to be believed, people routinely slapped and punched each other in the face if they were offended. Today's laws are very different. A comment from the YouTube video below: There is no such thing as "fighting words" in the state of California. The California Penal Code states, quite clearly, "Mere words are not sufficient to provoke a battery." Will Smith committed a battery (it may be classed a misdemeanor or a felony) on live television.
In this video, you can also see the entire scene, with nothing muted or bleeped out.