Most commercial sauces are actually pretty basic in composition. Tomato juice, sweeteners, thickeners, spices, seasonings, and of course smoke flavor. Smoke flavoring, whether it's liquid smoke or some other smoke flavor additive, is considered by serious barbecuers to be the product of the devil. True smoke flavor comes from the smoke itself and not a bottle. However it's what people expect in a barbecue sauce from the store so whether you hate it, love it, or tolerate it, it is here to stay. Commercial barbecue sauces have become a condiment like salsa or ketchup. The enormous sales generated by these sauces can't be explained by ribs and the like alone. People seem to be using barbecue sauces on lots of things.
Anyway, I digress. Tomato based barbecue sauces are popular because they are simple. A good thick sauce brushed on ribs or chicken is a great addition to your grilling or smoking. A great addition, that is if it compliments and doesn't over power. Why go to the effort to smoke or grill something if you are only going to taste the sauce? This is why a sauce shouldn't be too strong in flavor or used too heavily. A real barbecue sauce is a flavor enhancer.
Tomato-based sauces should never be used during grilling. The natural sugars will caramelize and burn the surface of the meat. This actually only applies to cooking at high temperatures. Sugars burn at temperatures well above the ideal smoking temperature so you can slather on sugar based sauces to your barbecue as long as you keep the temperature below 265 degrees F. Of course good barbecue doesn't need a lot of help in the flavor area so you might as well leave it off until later anyway. Barbecue sauce can be added at the very end or at the table. Traditionally the person doing the eating generally adds barbecue sauce. This way they get as much or as little as they want.
Tomato sauces can be made with ketchup, tomato sauce, tomato paste, tomato juice, whole tomatoes, you get the idea. To tone down the tomato flavor let the sauce simmer for 15-30 minutes before you use it. This will also give the sauce time to let the flavors blend together. You might also want to let the sauce sit in the refrigerator for a day before you use it. The acid in the tomatoes will further breakdown the ingredients and mellow the flavor.