Very nice and, in a way, very small (5)
I believe the answer is:
sweet
'very nice' is the definition.
(sweet can mean pleasant or adorable)
'in a way very small' is the wordplay.
'in' is an insertion indicator.
'a way' becomes 'st' (abbreviation for street).
'very small' becomes 'wee' ('wee' is a Scottish word for small).
'st' enclosing 'wee' is 'SWEET'.
'and' is the link.
(Other definitions for sweet that I've seen before include "Cute" , "Humbug!" , "Afters" , "Toffee, e.g." , "winning" .)