Your question is extremely apt!

Personally, I am slightly surprised by the English word order itself.

I would usually expect this to be a small-size light source that produces light from an arc within argon gas

However, the English w/o rather suggests that the arc itself is miniature — though of course to a large extent the 'size' of the arc is fixed by parameters other than mere choice of compactness (like amount of light output required, and choice of operating voltage, gas pressure etc.

It MAY just mean "a smaller sized arc than is usually used"

But I think my initial interpretetaion is the safer bet — however, you might want to investigate the following link, which looks as if it might be relevant:

... The value of b is easily controlled in the SWS light source, and an ... also applied to
an end-on investigation of the `mini- arc', an argon arc discharge used ...