Translation:Our bookshelf is small.
Ahhh homonyms, fun times. To repost a comment i made on an earlier exercise:
The kanji for the うち that means home/house is 家.
The kanji for the うち that's being used here as a pronoun is 内, which literally means "inside", and is hence used more to refer to more of a "me and my inner circle" sort of "us" rather than just a general "us"
From what I understamd though, the Japanese people generally use the hiragana うち rather than the kanji when they're using it as a pronoun. They use the kanji 内 more often when they want to actually convey the literal idea of "inside".
As for "small" it is, in fact ちいさい. The "小" that you see here is the kanji, and in this particular case it is pronounced "ちい". The "しょう" that you likely heard when you tapped on the individual word is just one of its alternative pronunciations, and is heard in cases such as 小学校 (しょうがっこう, elementary school)
I know it is a little late to ask this, but when do you pause after saying the particle 'wa'? I don't think I've heard it in short statements using 'wa' ('watashi wa jon desu', for example) but I hear a pause after the 'wa' particle in longer, more complex sentences like this one. Do I pause after using the 'wa' particle only in longer sentences?