Obstacle found by small horse (4)
I believe the answer is:
snag
'obstacle' is the definition.
(snag is a kind of obstacle)
'by small horse' is the wordplay.
'by' says to put letters next to each other.
'small' becomes 's' (abbreviation - e.g. clothes size).
'horse' becomes 'nag' (nag is a kind of horse).
's' next to 'nag' is 'SNAG'.
'found' acts as a link.
(Other definitions for snag that I've seen before include "Rip or tear" , "Unforeseen obstacle" , "Temporary hold-up" , "Tear - catch" , "Glitch" .)