| Keith Jurgens 360 |
Unfortunately, the RAW rules stack upon themselves, making Tiny characters (Sprites) almost unplayable.
A Tiny creature gets 1/2 Base Encumbrance capacity that a Medium creature would have. As listed above, the 10 STR can carry a mere 2 Bulk of Items. However, they treat nothing as Light or Negligible Bulk, per Table 6-20 (page 295). So, a light item to a Tiny Sprite is 1 Bulk, and a negligible item is considered to be light.
So, a Sprite Swashbuckler with STR 10, Leather Armor (Bulk 1, reduced to L because Tiny, but still considered to be 1 Bulk because the character wearing the Tiny armor is, indeed, Tiny), and a Rapier (Bulk 1, reduced to L because Tiny, increased back to 1 Bulk as with the armor) is just on the limit of being Encumbered. If you added, say, a Silver Religious Symbol (Bulk L), the character would now be considered Encumbered, as they are carrying Bulk 3 (3 items being treated as 1 Bulk each).
The fact that, RAW states that the Items are reduced to 1/2 Encumbrance for being Tiny BUT the Tiny creature still counts all L items as 1 bulk (and negligible items as L) would work on its own - but when that is stacked with the Tiny creature already getting their base Bulk limit halved - the Tiny character can barely carry basic gear, even gear that is resized to be appropriate size for a Tiny creature.
I've tested this on Hero Lab Online, the Wanderer's Guide, and Pathbuilder 2.0. Those tend to be even more harsh - they don't strictly follow the "9 light items count as 0 bulk" rule on page 272, they treat 1 light bulk as 0.1 bulk instead.