As you can see the lens has fuzzy/distorted edges towards the top. Any way i can smooth this out in Illustrator 3D? Its only there after i add the 3D effect.
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As the little warning triangle in the 3D effect dialog states "Gradients will be rasterized".
So, if your object contains gradients before you apply the 3D effect, those fills will get rasterized based upon the Document Raster Effects Settings (in the Effects menu). There's not a great deal you can to after the fact to improve the raster image edges. Well, beyond drawing additional objects to cover them up.
If you simply fill the shapes with flat colors, then apply your 3D effect, using "no shading" as the option in the 3D dialog window, you can then expand the artwork and manually apply gradients to the expanded shapes. This allows you to keep everything vector and have live gradient fills. It does require you to forego the auto-shading of the 3D effect and create your own shading appearance with gradients. So with some art it is more feasible.