Alright, so, I know that in page 153 of the core book, table 6.8 it says that tiny or smaller armor reduces the Armor Bonus it provides to AC by half.
So, if a tiny character is wearing Padded Armor (Normal AC 1)
Would the Armor Bonus to AC for a tiny character wearing it be 0 (rounding down) or minimum 1?
The rules don't state that there is a minimum, and as you always round fractions down unless specified, it would be +0 AC.
It would still be armor, so you can enchant it to get a better AC. You just wouldn't get any benefit from wearing it if its not enchanted.