The smallest capital in the world is Melekeok on Palau. With only 520 inhabitants it is even smaller than the Vatican. Vatican City is in fact only the second smallest capital in the world despite it being the smallest country with just over 900 people living there.
If you consider the Falkland Islands a country despite it technically being a British Overseas Territory its capital Stanley would be the third smallest capital. It has just over 2000 inhabitants.
If we go by recognized independent countries Funafuti on Tuvalu is the third smallest capital in the world. And in case you are wondering; Tuvalu does exist. It is a small island in Oceania. It is fully independent since 1978 and since 2000 proud member of the United Nations.
The smallest capitals listed by continent are:
* Africa: Victoria - Seychelles
* Asia: Maskat -> Oman
* Europe: Vatican City -> Vatican
* North America: St. George’s -> Grenada
* Oceania: Melekeok -> Palau
* South America: Port-of-Spain -> Trinidad and Tobago