Hi, Tim...
I have to disagree a little bit.
Both LR4/5 have similar Luminance Noise reduction sliders with ACR....They use the same engine (different code & UI)
Masking acts to create an on-the-fly edge mask, which varies with movement of slider....visible by holding down alt key. the appearence of noise reduction in smooth (sky) areas is it is masking out the sharpening in this area, thus reducing sharpening created noise.
JOHN
I'm all well aware of what you outlined about Adobe UI.
The masking slider in LR4 works for me on my files just as I said. Your experience may be different for you and maybe the same for others due to source data induced anomalies not known by Adobe Raw converter engine such as thickness and quality of the camera's AA filter (i.e. my Pentax K100D is thin compared to most similar model Canons/Nikons where I have to reduce sharpness) and other image texture variances. The noise I see in the OP's posted image is similar to what I get on my Raw PEFs and jpegs but cleans up better on that screengrab of the OP's Raw shot more so than on my incamera jpegs using the same ACR tool.
I work at a zoom view over 100% so I can see what the algorithms are doing to each individual pixel and how that will look when downsampled or viewed at lower zoom view levels which can change things quite a bit with appearance to noise and sharpness.
I do like the ability in LR to paint back noise suppression and other detail enhancements with the brush, but I really never saw the necessity because I know that a final print isn't going to show much of a difference. I've found you have to make big moves editing on a transmissive display before its seen on a print and fussing with a lot of detail issues such as noise suppression has been a big waste of time in this regard for me.