busybox/docs/smallint.txt

        smalluint i = index_in_str_array(params, name) + 1;
        if (i == 0)
                return 0;
        if (!(i == 4 || i == 5))
                i |= 0x80;

        return i;

I think that this optimization is wrong.
index_in_str_array returns int. At best, compiler will use it as-is.
At worst, compiler will try to make sure that it is properly cast
into a byte, which probably results in "n = n & 0xff" on many architectures.

You save nothing on space here because i is not stored on-stack,
gcc will keep it in register. And even if it *is* stored,
it is *stack* storage, which is cheap (unlike data/bss).

small[u]ints are useful _mostly_ for:

(a) flag variables
    (a1) global flag variables - make data/bss smaller
    (a2) local flag variables - "a = 5", "a |= 0x40" are smaller
         for bytes than for full integers.
            Example:
            on i386, there is no widening constant store instruction
            for some types of address modes, thus
            movl $0x0,(%eax) is "c7 00 00 00 00 00"
            movb $0x0,(%eax) is "c6 00 00"
(b) small integer structure members, when you have many such
    structures allocated,
    or when these are global objects of this structure type

small[u]ints are *NOT* useful for:

(a) function parameters and return values -
    they are pushed on-stack or stored in registers, bytes here are *harder*
    to deal with than ints
(b) "computational" variables - "a++", "a = b*3 + 7" may take more code to do
    on bytes than on ints on some architectires.