Types
According to an article on CanopyBed.net, different types of building materials can make two beds that are otherwise the same size look bigger or smaller. For example, a queen size wooden canopy bed frame will appear larger than a metal one. If you're fighting against a small room, think about getting a canopy made of a material like wrought iron rather than oak, which will help the canopy bed look like it fits into the small room.
Make It a Part of the Room
If you've decided that you'd like to explore putting a canopy in one of your small bedrooms, one way to pull the look off, according to the Room Decorating Ideas website, is to make the trappings of the canopy part of the whole room's decor. The site recommends that the material from the canopy be used to accentuate room accessories like the night tables. The way to do this is to drape the canopy materials around the bedside tables. The effect encourages relaxation because the draped material closes out distractions and adds a romantic feeling to the room.
Options
Although most canopy beds come with some sort of decorative drapes attached to the top of the bed posts, some style of canopy beds look good with the framework exposed instead of covered. These beds are typically constructed from metal and offer a good alternative to the canopy with lots of excess material because they won't overpower a small room. If you hang a mirror over the headboard of the canopy, it will open the room up visually even more, which will compensate for the size of the small room.
Decision
The short answer to whether a canopy bed can be put into a small room is "Yes, if the canopy is the right size." In this case, the canopy that you purchase needs to be purchased with the size of the room in mind. A canopy that's too tall in a room with low ceilings won't fit any better than one that's too wide in a small room. In these cases, substitute another kind of bed and add decorative items like a bed crown, which offers many of the features of the canopy bed but isn't as dependent on the height of the wall since you're the one who hangs it on the wall. You can adjust the height of the crown by where you hang it on the wall. That option doesn't exist with a canopy.