Small
Small is an adjective (and sometimes an adverb or noun) meaning
not big; less in size or amount than is average
a small business
small lunches
He’s small for his age
Those jackets come in small, medium, and large sizes
It does not require an explicit comparison to any other item for its meaning, although such comparison may be understood or implied.
I ordered a small cup of coffee. (I did not order a large cup.)
Smaller
Smaller is the relative adjective (or sometimes adverb or noun) of small, indicating that referenced term it has more of the characteristic of smallness
I ordered the smaller of the two cup sizes offered.
When using small, no other size needs to be explicitly considered. When using smaller, there must be a point of comparison, and generally only two choices. If there were more than two, referring to the item having the least of the characteristic, you would use smallest.
Less
Less is a determiner or pronoun that means
a smaller amount of; not as much:
[as determiner]:
the less time spent there, the better
[as pronoun]:
storage is less of a problem than it used to be
they returned in less than an hour
Less requires an explicit comparison. Even When you say I want less, you are asking for an amount that is not as large as the specific one being offered.
Note that less is generally used only with uncountable things. I want less sugar in my coffee. When referring to countable things (things with discrete indivisible units), fewer is used. I want fewer people at my dinner party.
Lesser
Lesser means
Smaller in amount, value, or importance, especially in a comparison between two things: chose the lesser evil.
Of a smaller size than other, similar forms: the lesser anteater.
Lesser refers to something discrete and is a specific comparison between two things. Less is also comparative, but does not refer to an explicit amount.
I want less sugar. [How much? Not clear.]
I want the soda with the lesser amount of sugar. [How much? The exact amount in the diet drink.]
The Questions
1 is smaller than 2
1 is less than 2
1 is the lesser number when compared to 2
Which you use depends totally on the context. Whether a higher integer means more depends on what you mean when you say more - as you suggest more debt means less cash.
This is even more complex when considering negative numbers. Which is greater, -1 or -2. If you are discussing temperature -2 is colder (more cold) that -1.