Finite-difference time-domain (FDTD) methods suffer from reduced accuracy when modeling discontinuous dielectric materials, due to the inhererent discretization (pixelization). We show that accuracy can be significantly improved by using a subpixel smoothing of the dielectric function, but only if the smoothing scheme is properly designed. We develop such a scheme based on a simple criterion taken from perturbation theory and compare it with other published FDTD smoothing methods. In addition to consistently achieving the smallest errors, our scheme is the only one that attains quadratic convergence with resolution for arbitrarily sloped interfaces. Finally, we discuss additional difficulties that arise for sharp dielectric corners.