Adjective word order
"Miguel vive en un pequeño pueblo en las montañas"
Why is it not "pueblo pequeño"?
3 Answers
Actually either way is correct. The first sentence is a little bit more "poetic". It gives the sentence a sense of melancholy, romance, sweet memories, etc.
It is emphasizing that it is a "SMALL town". Placing the adjective before then noun in Spanish can change the emphasis of the phrase or even, as DualG stated, the meaning of the adjective used. This is a link that explains this in more detail.
The "adjective after noun" rule is not absolute, and unfortunately there is no rule for when you can reverse the order. In this case it works either way, but not always.
For example:
enorme error, error enorme => both mean big mistake.
hombre grande => big man
gran hombre = great man