This problem involves visualizing a larger cube that is painted and then cut into smaller cubes. We need to find the number of smaller cubes that have paint on exactly two sides.
A large cube of size $N \times N \times N$ cut into $1 \times 1 \times 1$ smaller cubes results in $N^3$ smaller cubes.
The large cube has dimensions $N=3$. It is cut into $1^{''} \times 1^{''} \times 1^{''}$ cubes, resulting in $3 \times 3 \times 3 = 27$ smaller cubes.
We are interested in the cubes painted on exactly two sides. These are the edge cubes (excluding the corners).
In this case, $N=3$. The number of smaller cubes painted on exactly two sides is:
Number of 2-sided cubes = (Number of edges) $\times$ (Number of non-corner cubes per edge)
Number of 2-sided cubes = $12 \times (N-2)$
Number of 2-sided cubes = $12 \times (3-2)$
Number of 2-sided cubes = $12 \times 1$
Number of 2-sided cubes = $12$
Therefore, there are 12 smaller cubes painted on exactly two sides.
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