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The only eInk Reader I can think of that's going to offer any form of OverDrive on device would be the Kobo Aura One, which is anything but small. Anything else is going to require you to use Adobe Digital Editions to download any DRM'd books. ADE can also be used to transfer to the reader via USB.
The only other devices that allowed you to do anything on device with OD were a few old Sony models, but AFAIK that no longer works on most/all models.
As far as devices that can handle OD library books from a Canadian library any device, such as one from Kobo, that supports Adobe DRM will work. As others have said, smaller than a 6" screen gets tricky as there is nothing that I can think of currently on the market. I suppose you could try and find a deal on a used Kobo Mini (5").
The Mini is 133 X 102 x 10mm, so a bit smaller than the current Aura Edition 2 at 159 x 113 x 8.5 mm however it does not have a frontlight if that's important (no 5" device has had a light). A Mini's screen is 200ppi Viziplex, the Aura 2's is 212ppi Carta (newer, higher contrast). If you want higher ppi than that you'd need to find a Glo HD (out of production) or go with another brand of Reader such as Onyx Boox, Boyue, etc, but they'll all also be bigger than 5".
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