I feel compelled to say that I agree with LJ's assertions with Smooth Jazz and Acid Jazz as genres: the former is nothing but watered down Fusion conceived and executed in an attempt to be pleasant (but Kenny G's intonation often spoils even that) and the latter is...well I actually don't even really understand what it means. I keep hearing how people like this Acid Jazz group or that one and yet I really have no concept of what they mean by that. Methinks some marketing ploy is at work again.
However. I have to offer an alternative perspective on funk and especially on fusion. I don't think it's fair to look at these two genres as only being useful for a starting point. Historically it was quite the contrary; fusion arose because jazz needed to infuse some kind of new life. Just as jazz "standards" come from popular music of the 30s and 40s, jazz fusion was influenced by from the rock music of the 60s and 70s. What's more, the man most responsible for the change to fusion, Miles Davis, was not backing off or watering down his music but rather raising the density and the energy into a menacing wall of sound. People love Bitches Brew but the edgy masterpiece in my opinion is On the Corner. There's nothing toe-tapping or overtly commercial about that record. I also love the earlier In a Silent Way, kind of the calm before the storm. The most incredible thing about that particular album is that everyone who would become a major force in fusion was present: Herbie Hancock, Wayne Shorter, Joe Zawinul, John McLaughlin, Chick Corea, Tony Williams, and Dave Holland (though his contribution to jazz is more in the avant-garde acoustic realm) made up Miles' band for the session.
Moving past Miles, though, I can start to imagine how one might find fusion a little too pop-friendly, and yes, the cheese factor comes into play. But just like any other period of jazz, there are albums of profound creativity, mostly whenever new electric sounds were employed in creative compositional ways. Herbie Hancock made some great records in the early 70s with his Mwandishi band, like Crossings and Sextant that were extremely experimental and not at all simplifications of jazz or concessions to the pop crowd. Weather Report's Joe Zawinul and Wayne Shorter got to experiment with longer written forms whose merit would be even more recognizable if not for some dated synthesizers. All in all, I don't see fusion as a watered-down version of jazz, only useful as an accessible doorway into the "real" stuff once one's ears grow larger with age and experience. My young high school ears are big enough to take in and like everything from Ellington and Monk to the Yellowjackets. I guess I'm able to keep one ear in the "dark side" and the other to the "light."