Align inline-block DIVs to top of container element

Because the vertical-align is set at baseline as default.

Use vertical-align:top instead:

.small{
    display: inline-block;
    width: 40%;
    height: 30%;
    border: 1px black solid;
    background: aliceblue;   
    vertical-align:top; /* <---- this */
}

http://jsfiddle.net/Lighty_46/RHM5L/9/

Or as @f00644 said you could apply float to the child elements as well.