If "ptáci" is masc. anim. nom. pl. shouldn't the demonstrative adjective be "ti" rather than "to"?
You're right about the first part, however, if you were to use "ti", you'd have to say "Jsou to ti malí ptáci?". Unfortunately, then it would not be a perfect translation of the sentence above.
In this sentence, there is used a phrase "je to/jsou to", which is commonly used in Czech to indentify things/people/etc. The "to" does not change with the gender of a noun, only the verb has to match in singular/plural. (eg. Jsou to ptáci? Jsou to ženy? Jsou to města? Je to muž? Je to kočka? Je to kuře?)
Paul, don't confuse the demonstrative ADJECTIVE 'to' (and its other inflections such as 'ty', etc.) with the uninflected demonstrative PRONOUN 'to'.
Here we have the pronoun, not the adjective. And in Czech, the singular neuter ('to') is used even with a plural complement. So the sentence here means literally 'Are it small birds' = 'Are they small birds'?
'Are those birds small?' = Jsou ti ptáci malí?
'Are they little birds?' = Jsou to malí ptáci?
Is this the same as "are those little birds? " I'm trying to extend what I know about "Je to x? " which could mean "is it/is that x? "