The Liquid-Crystal on Silicon (LCoS) spatial light modulator (SLM) has been used in wavelength selective switch (WSS) systems since the 1990s. However, most of the LCoS devices used for WSS systems have a pixel size larger than 6 µm. Although there are some negative physical effects related to smaller pixel sizes, the benefits of more available ports, larger spatial bandwidth, improved resolution, and the compactness of the whole system make the latest generation LCoS microdisplays highly appealing as the core component in WSS systems. In this review work, three specifications of the WSS system including response time, crosstalk and insertion loss, and optimization directions are discussed. With respect to response time, the achievements of liquid crystal material are briefly surveyed. For the study of crosstalk and insertion loss, related physical effects and their relation to the crosstalk or insertion loss are discussed in detail, preliminary experimental study for these physical effects based on a small pixel LCoS SLM device (GAEA device, provided by Holoeye, 3.74 µm pixel pitch, 10 megapixel resolution, telecom) is first performed, which helps with predicting and optimizing the performance of a WSS system with a small pixel size SLM. In the last part, the trend of LCoS devices for future WSS modules is discussed based on the performance of the GAEA device. Tradeoffs between multiple factors are illustrated. In this work, we present the first study, to our knowledge, of the possible application of a small pixel sized SLM as a switching component in a WSS system.