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Beings can be of vastly different sizes. Don't have all your monsters or critters be roughly human sized. Have some be gigantic. Have some be tiny. It can add a lot of interest in exactly how you interact and deal with such creatures.
Commentary by memnarch (who has not seen the movie)
Well, I'm not sure exactly what I was expecting now, but this little alien certainly wasn't on the list. They do have a little welding visor though, which is perfect for a "blacksmith". Metalsmith? Circuitsmith seems like a pretty good sci-fi descriptor if Babu only works on fixing/modifying droids.
Making a copy of that dagger feels like a comic thing, so why would the protagonists need to open Threepio's head up anyway? Did something happen down in the gravel pit? I would have said the Rathtar grabbed the droid and that did something to necessitate this operation, but it turns out that I'd misremembered that scene. And I guess there would have to be some urgency as well that means the group can't simply head back to the Resistance and get a known droid mechanic for repairs.
Transcript
Zorii: Babu, these fine people are “looking for a blacksmith”.
Babu Frik: Thanks, Zorii.
Babu Frik: Babu Frik, at your service. What do you need?
{Babu Frik is a minuscule alien about the size of mango, wearing drop-down welding goggles, currently in the up position}
Poe: A copy of a dagger. This droid has 3-D video.
Babu Frik: Mmm. Let’s pop her head and hook her up to the mainframe.
Rey: You weren’t kidding about the slicing.
C-3PO: My moment to be important! Let’s go!
Babu Frik: That’s the spirit! Most droids scream and try to run.
Finn: Are you sure about this, 3PO?
C-3PO: Don’t worry, my warranty was voided decades ago. What’s the worst that could happen?
{3PO is wired up with multiple coloured wires trailing out of the back of her head, where the outer plating has been removed to expose internal wiring}
[SFX]: zzap!!
C-3PO: Ow!
Rey: Impedance mismatch, for one.
C-3PO: Well, I’m glad the worst is over.
Babu Frik: System corruption. Personality rewrite. Maximal marble meltdown. A screaming feedback loop you can’t shut off.
C-3PO: Those are all statistically negligible risks, I trust?
Babu Frik: Oh, no. Those are the side effects if things go well.