Good call. Seems minimum for ZFS is three quarters of a Gigabyte, anyway. And definitely not made for what OP does 😆

truncate -s 128M fs.img  
parted fs.img  
  mklabel gpt  
  mkpart primary btrfs 1MiB 100%  
  quit  
sudo losetup --find --partscan --show fs.img  
sudo mkfs.btrfs /dev/loop0p1  

You should be able to skip the loop device stuff and work on an actual device instead. Seems to me the limit is somewhere between 64M and 128M.

Edit: But as edinbruh said, maybe try f2fs if it's a flash device, that's probably a bit more lightweight?! And since I don't know what you're doing... If it's embedded stuff and you're alright with read-only, you might want to use squashfs.

So, first of all, there is no gui for this, that I'm aware of, so you will have to do it from terminal. Second, on f2fs, compression works that you don't enable compression for a folder, instead you mount the drive with compression enabled, and new files will be compressed automatically.

So what you need is to set up your disk to be mounted with compression. There are many paths you can follow here. If you want your drive to be (almost) permanently connected, the easiest way is to use "/etc/fstab". If you want to use it as a regular SD card, mounting and ejecting it from your file explorer etcetera, then you should go here and learn how to have udisks2 mount your device with compression, which should be what your desktop environment uses to mount drives. I suggest you set that up for your specific device, and not for all f2fs devices. Good luck.

You can look up other useful f2fs options on the arch wiki. I suggest you add all those options that reduces writes to your disk and improve durability (like lazytime).

You should use zstd as compression algorithm, and because this is a slow and small drive, you can crank up the level of compression.

If you manage to pull this off, the next time you install a (bigger and faster) drive on your pc, you can try to look into zfs.