The setting for the first half of the game and parts of the second, the Small Magellic Cloud (SMC) is the location of Yuri's 'birthplace' and a number of small nations. Like the Large Magellic Cloud it has it's fair share of pirates and feuding nations.
SPOILERS BELOW Edit
The SMC is the location of the attacks and taken over by the giant space fairing empire Lugovalos at the end of the first half of the game. With the the becoming the forward base of operations for Lugovalos, it is not visited until later into the game, when the LMC counter attack begins against Taranis. It is presumed to have been destroyed by Phages at the end of the game.