"There was a chance to move to the Premier League and be a squad player," admitted the ex-Everton defender.
"But this is a club on the up. This is the right challenge for me at this time in my career," he told BBC Radio Leeds.
"The day that I came over here was meant to be a day to look around, to see the stadium and see what I thought of the place.
"But I liked what I saw and knew this was the place for me so I actually ended up agreeing to sign on that day.
"Sheffield United were keen to keep me but this move was the right one for me and, in the end, this was the only club I decided to speak to."
As well as trying to help Lee Clark's Huddersfield win promotion to the Championship next season, Naysmith also hopes that the move will help him get back into the Scotland set-up after a season lost to a knee injury.
Naysmith, who won the last of his 46 caps in April 2009, is still hopeful of reaching the 50-mark in order to enter the hall of fame for Scottish footballers.
"I'm totally over the knee injury problems I had last season," he said. "And I'm keen to kick on again now.
"I want to get to 50 caps for Scotland and that will really motivate me.
"A lot of people might see this as a backward step in my Scotland career by going down a league but it is not.
"But this is one step down a league in order to step up again next season when we get into the Championship.
"I don't want to make rash statements but I'd be disappointed if we didn't get promoted to the Championship next season."
Source: BBC Sport
Source: BBC Sport