The answer to 'why is my recessed lighting burning smell' is that a burning smell from recessed lighting is often caused by an electrical issue, such as a malfunctioning component or overheating. This can be a serious fire hazard, so it's important to address the problem right away.
Some common causes of a burning smell in recessed lighting include faulty wiring, a bad transformer or driver, or a light bulb that is the wrong size or type for the fixture. Overheating can also occur if the insulation around the fixture is inadequate or if the fixture is not properly ventilated. If you notice a burning smell, turn off the power to the fixture immediately and do not continue to use it.