Undersized means smaller than it should be, or smaller than normal for its kind. The 'should be' part matters: this is not just 'small', it is small measured against some expected size. An undersized fish is under the legal size limit and must go back in the water. An undersized room is too small for what you want to put in it. An undersized bolt will not hold. It is used about people too, usually about athletes — 'an undersized point guard' means small for that position, and interestingly this is often said with respect, because the player succeeds anyway. Said about a child, 'undersized' sounds clinical and a bit unkind; 'small for his age' is the gentler everyday phrasing. You may also see the spelling 'undersize' with no -d, used before a noun in technical and fishing contexts ('undersize catch'); both spellings are accepted, and -sized is the commoner one. It is a fairly neutral, slightly technical word — engineers, builders, fishing officers and sports writers use it more than ordinary speakers do.