There’s also the issue that athletics are governed by the N.C. High School Athletic Association. For homeschoolers (or private school students, as well) to play high school sports, the state would have to get involved with the decisions of a private nonprofit organization, and there are reasons to be concerned about that.
Getting into other extracurricular activities is up to local school officials; I’ve heard of homeschoolers playing in bands or joining after-school academic clubs occasionally, though mostly they arrange their own activities as opportunities arise.
But kudos to Sen. Smith for bearding the lion in its lair. Well, maybe tweaking it a bit, anyway.