Indeed, it is true that although the taunt-spike is only a single input, the correct use of it is very rarely seen. It requires the user to utilize the down taunt at a precise moment in time in order to force their opponent to be in a situation where the taunt will connect, and if it does not connect, due to creative thinking, or sometimes luck, on the opponent's part, then the user cannot be punished because of the lag frames. This will lead to two things.
1. The opponent will think they have an opportunity to attack, but in actuality, the user has timed the lag frames, to prepare to punish by shielding or "spot dodging," followed by a move input by the Luigi player.
2. The opponent will make a mistake whilst dodging the taunt-spike, that can lead to death or punishment.
Due to these things, a Luigi player who utilizes the taunt in the correct way, will not only succeed in killing with it, but also be able to use it to miss purposefully, in order to "mind game" the opponent. Proper taunting can lead to stage control, and the good Luigi player will not be punished for it.
Also note that the taunt spike has incredible priority, and when it connects, even if the Luigi player is harmed during the taunt, the opponent will still be spiked. The down taunt can also be used before or after any of Luigi's moves, forming a 'Combo.' The down taunt can also be used in a combo to and from other taunts.