This is an area of ongoing debate and inquiry for historians of slavery in the antebellum south; whilst we have quite a large body of research on the nuances and intriacies of plantation slave life, the body of research on small-scale slaveholding is significantly smaller, though growing. It's important to note that there are a lot of overlaps in this question with other aspects of slavery - for example, small slave holders are also more likely to be found in regions where slavery was, in general, less intensive. Still, I'll try to answer your question as best as I can.

I'll begin by answering the last part of your post; how prevalent was plantation slavery relative to smallholding slavery? The answer to that depends partly on how you decide where the boundary between small and large-scale slave-holding is; but in the context of your question, estimates based on the 1860 census suggest that around half of all slave-holding families owned just one slave; 12% owned fewer than 10 slaves. So for the slave-holding class, small-scale ownership was the norm of slavery - most slave owners never presided over the intense kind of plantation slavery we are most familiar with today.

Certainly, many white contemporaries felt that small slave-holding was more humane than plantation slavery. The greater intimacy smallholding required - with a small number of slaves working and living closely with a master and/or mistress - could certainly ease some of the excesses of the institution; it is not bizarre to find white slaveholders who saw their slaves as an extension (although an inferior, degraded extension) of their family. It has been argued that this unique intimacy bred a profound paternalistic relationship between owner and slave, in which the former felt a greater obligation and duty of care towards the latter. It is well documented that slaves on the smaller holdings of the border states considered their lot in life to be preferable to that of slaves in the Lower South, and for many the risk of being sold on to cotton plantations in the Lower South was a serious source of fear and anxiety.

For the slaves themselves, smaller scales of ownership may have made resistance to their owner's power easier in certain contexts. In such an intimate environment, re-negotiations of the power relationship may have been made possible to an extent by the sense of familiarity between owner and slave, and the greater importance attached to individual slaves as economic units. A more 'sympathetic' slave owner might be more willing to listen to individual demands, or take positive action arising from acts of rebellion, from a slave he or she knew well and liked. The power relationship was in some ways much more personal and emotional for owner and slave alike.

This does not mean, though, that life was better for all slaves in this circumstance. Intimacy may have given greater room for acts of kindness, but it also gave freedom to violate and abuse. The emotional nature of the relationship may have made some masters more willing to resort to extreme, anger-induced tactics, or slaves more willing to push their luck until violence was the only means a slave owner could see to reinstate their authority. Such an environment also left slaves open to severe emotional, physical, psychological and sexual abuse - arguably in a more severe fashion than some plantation slaves may have faced.

In terms of the experiences of slaves in their own words, the pattern is mixed. Some slaves recorded very fond memories of their owners; others very bitter, painful ones. Many fall somewhere in between the two. Generally speaking, slaves on small estates or in private homes seem to fare better than plantation slaves; some exceptionally so, but some fare just as badly or perhaps worse. Ultimately, slavery was still slavery - a system of economic and social exploitation based on the complete degradation of the enslaved, underwritten by the threat of violence.

Diane Mutti Burke's book On Slavery's Border: Missouri's Small Slaveholding Households, 1815 - 1865 is a superb read on this topic if you're interested, particularly Chapter 4.