The Small rune pouch allows you to use 2 types of runes while taking up only 1 inventory space - 16,000 of each rune type (max of 32,000 runes). These runes will be used as if they are in your inventory as normal when spells are cast which need them. Use of the pouch will not cause it to degrade. When you have less than 500, of either type rune, you will be given a warning message in your chat box.
While you can obtain more than 1 small rune pouch, you are only able to use 1 at a time; however, you can use both a Large and Small rune pouch at the same time as well as any combination of dyed pouches as long as there is only one of any given type. Small rune pouches include: Barbarian Assault.