In the present study, the role of the Bound Magnetic Polaron (BMP) model is understood in Sm-doped ZnO nanoparticles synthesized via a facile co-precipitation method based on the experimental results from magnetic properties and electronic structures. Experimentally, these compounds exhibit a typical M vs H curve at room temperature depicting ferromagnetic (FM) ordering which decreases exponentially upon doping. Investigation using X-ray diffraction, Raman, and X-ray Photoelectron Spectroscopy (XPS) rule out the role of any impurity phases or micro-clusters of Sm, in the observed FM ordering. Further, O 1s XPS spectra reveal enhancement in the lattice O2− anions in Zn-O bond and reduction in oxygen vacancies (VO) resulting in the modification of oxygen defect structure. In the BMP model, the formation of Sm3+-VO-Sm3+, upon doping is assumed to be an important factor that mediates and stabilizes the FM ordering. By increasing the Sm concentration, the VO decreases, thus reducing the total number of BMPs to 1017cm−3, well below the percolation threshold of 1020 cm−3 resulting in reducing the FM component. This study shows that the BMP model explains the FM ordering in the ZnO host and is sensitive to the concentration of Sm ions and the induced oxygen vacancies play a vital role in stabilizing the FM behavior.