Rumors of a smaller Surface tablet have been circulating for nearly a year now, and a couple weeks ago those rumors were confirmed by a bunch of leaked product listings on Amazon.com. The listings were posted by a case maker, and they revealed that the Surface Mini would be an 8" tablet - probably running either Windows RT or Windows 8. Little is known about the Surface Mini other than the screen size, and unfortunately those leaked product listings have since been removed from Amazon.
Microsoft first launched the Surface tablet in late 2012, and in 2013 they launched a couple follow on models. The Surface tablets currently all have 10.6" screens, including the Surface 2 which runs Windows RT on a 1.7GHz Tegra 4 CPU with 2GB of RAM, and 32GB or 64GB internal storage. There's also the more expensive Surface 2 Pro, which runs Windows 8.1 on a Core i5 Haswell CPU, 4GB or 8GB RAM, and up to 512GB internal storage.
Microsoft has never sold very many Surface tablets due to its high price tag, but that hasn't stopped them from continuing to make their flagship tablet. And it certainly hasn't discouraged Microsoft from launching the Surface Mini a couple weeks from now.