>Thief loots a viking barrow, picks up a surprisingly well-preserved (possibly magical) set of chainmail and helmet
>Him: "I'll give them to [the halfling fighter]."
>Me: "A bit too big, isn't it?"
>Him: "Eh, we can find a blacksmith to fit it for him
I'm genuinely at loss on how easy or difficult this would be. How bad would it be, realistically speaking, and how would it work in a fantasy game instead?
Stop looting graves
In your example I'd go for impossible. Imagine it that way - take a leather jacket for a normal sized grown man, and then imagine how someone would "resize it" to fit a 10 years old. It cannot be done without pretty much destroying it and making a new one from the scrap.
Other than that, when you find a random human armor and want it to fit your own human/elf (depending on a setting) fighter, I wouldn't go too much into detail, just an arbitrary number of days of work plus x amount of currency, the more powerful/complex the item the more expensive it should get.
Can be done somewhat easily.
Historically, noblemen would sell their outdated or damaged gear to highranking soldiers, who then would sell their gear to lowranking soldiers. This means that it was very common for blacksmiths to have experience retrofitting armour, or altering staps on weapon scabbards. Shrinking down helmets... that's a bit trickier I imagine. Maybe the blacksmith can just "shave off" a bit of the helmet?
Mind you, shaving off bits of the helm will only really work with "advanced" helmets, like you find in the later medieval periods.
You can't do it with a viking era nasal helm because that thing is constructed out of pieces, and when you start shaving off pieces of that thing, you have to reassemble the whole thing, and might as well melt it down and make a new smaller one.
Usually, with conventional armor, you can have the blacksmith just trade a player's Medium piece of armor for a Small one of the same kind, as smaller equipment is usually the same price or cheaper. The blacksmith won't have any real work and would end up profitting the difference between sets. If both are worth the same, ask for a small "exchange fee".
Magic stuff, though, is setting-dependant. If you're talking about common D&D settings, where magic is everywhere and magic items are just another form of currency, you can do the same as above. If it's a world where magic is rare and mysterious, it might be easier to try and somehow transfer the enchantment from a Medium gear to a Small one than to cut off half of the enchanted one. Results may vary.
I would assume a magic set of armour would resize itself once attuned or whatever. If you're gonna flood the thing with protective charms, you may as well make it super comfortable to boot.
It's patently absurd to believe a suit of chainmail made for an adult human can be "fit" to an adult halfling without removing about half the rings.
If it's D&D, magic items explicitly resize to fit the wearer. A goliath and a halfling can both wear the same suit of magical armor.
>If it's D&D, magic items explicitly resize to fit the wearer
Not in editions before 3e.