Translation:My little brother thinks penguins are mammals!
It's a secondary clause, a secondary main clause, to be precise, so it has to be separated by a comma. Both clauses could exist independently, but the second serves as an object here. The comma is also nice because it tells you where to insert a little break.
Literally "my smaller brother" would be "mein kleinerer Bruder"
- My brother is small = Mein Bruder ist klein (positive)
- My brother is smaller = Mein Bruder ist kleiner (comparative)
- My brother is (the) smallest = Mein Bruder ist der kleinste/Mein Bruder ist am kleinsten (superlative)
- My small brother = Mein kleiner Bruder
- My smaller brother = Mein kleinerer Bruder
- My smallest brother = Mein kleinster Bruder
You can see if "kleiner" is predicative comparative or attributive positive by looking at its position (in front of a noun or connected with a verb like sein/werden).