Refers to the waist or the area around the lower back. Often used in contexts of posture, movement, or physical description.
He bowed slightly from the waist in greeting.
I feel pain around my lower back.
Compound of 小 (small, slight) and 腰 (waist). The exact historical derivation is uncertain, but the word likely refers to a slight or modest movement of the waist, or simply the waist itself.