The Little Man is a tiny person whom Quote finds wandering in the cemetery. The player can return him to his family in the Little House bottom left of the Outer Wall where the Sky Dragon is located. His inventory description in the AG translation reads, "Are we there yet?".
The Little Man can be found in the graveyard in Mimiga Village. He can only be collected after Quote talks to the Little Man's wife in the Little House at the bottom of the Outer Wall. By bringing the Little Man home, he offers Quote the option of trading the Blade for the Nemesis. In a port of Cave Story, this will unlock the Nemesis Challenge.