Depends on the game.
The MD controller uses the same protocol as the SMS controller, except it multiplexes A, B, C, and Start onto two lines. B is muliplexed with A, and C is multiplexed with Start.
On the SMS controller, B/A is mapped to I, and C/Start is mapped to II. (I think these are right, but they might be backwards...) Basically, the game will interpret pressing one of the SMS controller buttons as pressing two of the MD controller buttons. For Sonic games, this won't be a problem, but games that require use of all three buttons individually won't work too well.
Also, games that specifically detect what controller is in use (e.g. Street Fighter II) will not detect an SMS controller, since the controller ID mechanism used in the MD results in a value of $F for the SMS controller (which is the same as "nothing connected").
This post has been edited by GerbilSoft: 05 July 2011 - 12:02 AM