Retailers must now ensure the products are covered up and no longer in public view unless a customer asks for them.
Shop managers and assistants who break the law could face fines of up to Â£5,000 and six months in prison.
The move follows similar restrictions introduced for larger stores and supermarkets in 2012.
Other outlets such as pubs and clubs also have to keep cigarettes out of sight.
Cardiff retailer Bobby Singh called the ban "pathetic" and said he did not believe it would stop people smoking.
Public Health Wales backed the new law and said the restrictions were a "very important development in improving health in Wales".
A spokesman added: "They will play an important role in reducing the appeal of smoking."
Display restrictions on cigarettes and tobacco products sold by small traders in Wales have come into force.