small
佌 centers on smallness, often describing a person or thing of little stature or significance.
佌 combines 亻 (person) with 此, which likely contributes the sound and may carry a sense of 'this' or 'here', but the exact historical development is uncertain.
A person 亻 beside 此 (this/here) suggests a small, nearby person — someone of little stature.
For シ, imagine a small person saying 'she' is tiny: she -> シ, and the person 亻 beside 此 is small.