God of Small Things is a very interesting title, with an even better explanation. The book itself is very magical to go along with a magical title. In my opinion, the “God” they are referring to most closely refers to Velutha, though it can also have many broader meanings. Take this quote for example,

Even later, on the thirteen nights that followed this one, instinctively they stuck to the Small Things. The Big Things ever lurked inside. They knew that there was nowhere for them to go. They had nothing. No future. So they stuck to the small things.

Here we can see the characters thoughts on small and big things. Velutha makes Ammu realize that while during the course of a person’s life they may want strive to obtain the big things, it’s really the small things that a person can surround themselves into to make them happy.