Quick answer
poco = little in quantity: not much, few, hardly any.
pequeño = little in size: small, physically or in scale.
With an adjective, poco also means "not very": poco interesante = not very interesting.
Side by side
Poca gente / gente pequeñaFew people versus physically small people — the difference is not subtle.
Quiero un café pequeño.I want a small coffee — the cup size. <i>Poco café</i> would mean barely any coffee in the cup.
Es poco amable.He is not very friendly — poco before an adjective softens it into a negative.
Memory trick
Could you count or measure it out? Then poco. Could you draw it small? Then pequeño.
Typical mistakes
Vivo en un apartamento poco.
Vivo en un apartamento pequeño.
You mean the size of the flat, so it is pequeño. Poco cannot describe how big a thing is.
Tengo pequeño tiempo.
Tengo poco tiempo.
Time is a quantity, not an object with dimensions, so Spanish uses poco.
Check yourself
Fill in: "Solo hay ___ leche en la nevera."