Can small lung nodules be cancerous?

Rarely: In people without history of cancer, 5 mm or less in diameter lung nodules have a <1% chance of being malignant. Lung nodules are generally followed on ct scan for 2 years to be sure they do not grow in size. Those that grow can be biopsied by ct guidance, bronchoscopy, or surgery. Check for other causes (exposure to tb, rheumotologic). http://radiology.rsna.org/content/237/2/395.long.

Yes: Cancers do start out as small lesions/nodules.