Many states have placed an outright ban on bringing libel and slander cases in small claims court. However, even in states where you can bring a defamation case in small claims court, oftentimes judges don't take them seriously, because most untrue statements don't result in serious damage.
To prevail, you need to show that the statement made about you was false, that others saw or heard it and understood that it was about you, and most importantly, that the statement significantly harmed your reputation. In addition, if you are a public figure (politician, actor, media celebrity), you not only need to show that the statement was false, but also that the defendant either knew it was false or made it in reckless disregard of whether or not it was true. In short, the fact that the defendant's statement was just plain wrong isn't enough to make you a winner if you are a public figure.
EXAMPLE: Your nutty neighbor tells everyone on the block you are an idiot. You wonder if you have grounds to sue. Probably not, because chances are you haven't been harmed–after all, everyone in the neighborhood knows your neighbor is a kook, so it's probable that no one has taken his comments seriously. However, if he writes and distributes a leaflet all over town that falsely accuses you of having sex with minors, your chances of winning are much better. There are several reasons why: Being accused of a sex crime is much more likely to damage your reputation than being called an "idiot;" the fact that the defamatory statement is printed on a flyer makes it easier to prove; and the wider distribution of the printed fliers makes it more likely that at least some people who receive the flyer won't know that the writer isn't very reliable and therefore may take it seriously.
There are many intricacies to defamation law. To learn more, start with online resources such as the Cornell Law School website; or buy a law student course outline on torts (a negligent or intentional "wrong" that results in damage). These are carried by all law bookstores (usually located near law schools) and most public law libraries.