While several studies suggest that small country size is conducive to democracy, the understanding of this link between smallness and democracy is still less than complete. By examining the nature and profile of microstate democracy in the year 2005, this article aims at promoting a better understanding. Two research tasks are pursued. First, the article investigates if microstate democracy is predominantly about majority democracy, or alternatively consensus democracy, or a blend of majority and consensus. Second, while testing the validity of diffusion and rationality assumptions for explaining country choices of democratic form, the article aims at drawing forth a better appreciation of the foundations of microstate democracy. The findings indicate that smallness is particularly conducive to majority democracy, and that diffusion goes a long way to explain this small state preference for majority rule. However, the microstates within the majoritarian framework are often inclined to resort to non-majoritarian choices, and elements of rationality are therefore in the picture as well. Small size does not appear to associate systematically with culture to the exclusion of rationality or with rationality to the exclusion of culture.