Using definition 1.

    smallest(4, [2,6,1])
      = smallest(2, [6,1])   (since 4 > 2)
      = smallest(2, [1])     (since 2 < 6)
      = smallest(1, [])      (since 2 > 1)
      = 1

Using definition 2.

    smallest(4, [2,6,1])
      = smallest(min(4,2), [6,1])
      = smallest(2, [6,1])
      = smallest(min(2,6), [1])
      = smallest(2, [1])
      = smallest(min(2,1), [])
      = smallest(1, [])
      = 1