Smalltalk provides game lore and it is a means to acquire unique things:
- Trade Agents
- Discounts for stations or traders
- Location and skill visibility for hirable, well-skilled NPCs
- Collecting Training Manuals
While Otani is docked on stations, NPCs will occasionally start talking, and when they do a speech bubble appears over their head to help us identify them in a crowd.
This is our cue to undertake an optional minigame if we wish. There are quite a few conversation topics, from the mundane (eg chatting about holodancers) to the serious (eg concerns about messing with AI). Since they add colour to the game world, they can be interesting; unfortunately the discussions cannot be sped up or skipped, and there are only a finite number, so in the end it is possible to get frustrated by them. This is where the 'Borderless Windowed mode' comes in handy as Alt+Tab to (eg) a website cuts the audio but lets you see how things progress, if you keep the website window clear of the subtitles. Similarly, while hunting for Smalltalk, you can do the same thing to pass the time while waiting for someone to start speaking. That's what I do anyway 
Finding smalltalk
Since the chance of an NPC talking is random and not all NPCs will necessarily be the kind you would like to talk to, it is sensible to find a spot with lots of NPCs to increase the chance of a useful one talking early. Smalltalk is available only once per NPC; if you enter smalltalk then win, lose or cancel the 'talk, that NPC will not proffer smalltalk again until you leave the zone
Good places to find groups of NPCs:
- Bunk rooms on all docks tend to hold up to ~8 NPCs so smalltalk normally starts within 10-20 seconds.
- Generally, Administration platforms house station crew, which can help when recruiting Trade Agents.
- In DeVries a handy place is the Engineering platform as groups of NPCs tend to be at the docking platform.
- In Albion or DeVries a handy spot is the Trade platform since groups can hang around at the end of the first corridor.
- In Fields Of Opportunity|Verdant Profit|TU Overwatch, there are normally many Teladi in the main, central docking area.
If you 'encourage' an NPC trader by selling something to them, or preferably buying something from them, the chance of them smalltalking appears to increase slightly. So hunt out those junk dealers & buy scrap metal from them personally if you're after a decent ship crew! Simply talking to an NPC can increase the chance of smalltalk happening, even if you only ask the way to another NPC
Potential rewards from success* at:
level 1 smalltalk (numbers corresponding with radial menu):
- Ask for: Discount... (If NPC is a Trader they will offer a Personal Discount for their wares (eg marines or rough gemstones); for all other NPCs the discount will apply to the (docked) station only - see below).
- -not used-
- Ask about: Job Applicant (offers the location and skills of a different NPC available to hire by Otani on the current dock). If no other hirable NPC exists this option will be unavailable
- Trade Updates (see below as not all NPCs offer it; they unlock continuous, real-time market info for the NPC's station. This is not the same effect as posession of Trading Computer sofware).
- Give: Item... (give a craftable gift that unlocks level 2 of smalltalk).
- -not used-
Level 2 smalltalk (only available via the "Give: Item" option in level 1)
- Ask for: Discount... (a higher-quality version of the discount available at level 1 above)
- -not used-
- Ask about: Job Applicant (different to level 1 and 3 smalltalks, so perhaps the range setting is station)
- -not used-
- Continue: Smalltalk (hard) (successful completion of a second smalltalk (quicker reactions needed) unlocks unlocks level 3 of smalltalk)
- -not used-
Level 3 smalltalk** (only available via level 2 smalltalk success)
- Extended Discount. (lasts a long time; probably the same numerical discount as level 2)
- -not used-
- Best Job Applicant (offers the location and skills of an NPC of a chosen type with the best, previously unknown skills, in the zone)
- Ask for: Employee training (source of Training Manuals - see below)
- -not used-
- -not used-
* A score of 7+ or more across 2 or 3 minigames that include no critical failures)
** A score or 4+ on all 3 minigames.
Trade Agents
These will only be offered by a subset of NPCs.
NPCs that can offer Trade Updates:
Arms Dealer
Inventory item traders (e.g. Food Merchant or Black Marketeer).
License broker
Mechanic
Recruitment Officer
Ship Dealer (may be only S/M ships)
Non-hirable station crew, which are working on a station (Defense Officer, Engineer, Manager or Specialists) - typically found on Administration platforms.
NPCs that never offer Trade Updates:
Architect (even if they are working on plot-rated NPC CVs)
Captain
Marine Officer
Pilot
Station crew if they are available for hire (Defense Officer, Engineer, Manager or Specialist).
Discounts for stations or traders
A smalltalking NPC can offer a discount at their station, which offers higher profit margins if taken advantage of.
If smalltalking with an NPC Trader (e.g. Black Marketeer, Arms Dealer or Mechanic; Recruitment Officers too), will offer a choice of station or personal discounts. Station discounts from smalltalk apply on top of any other discounts, such as via Standings (Reputation) or those found outside stations while flying around near the station. Therefore they can all be stacked up to gain a higher profit margin than would otherwise be available.
Station discounts do not apply to shipyards as they don't produce anything other than ships. However they do apply to any other station's products. Shipyards will only usefully provide comissions (ie 'sell us that <ware>' at a bonus rate, rather than 'buy this <ware> from me' at a discount)
Solomon Short wrote:
"The Station discounts/commissions apply to all relevant trades with that station for duration.
You can also keep wandering around (&/or visit other docks on the station) to find more opportunities to unlock them, stacking them up.
So if you pick which stations you seek them on (I believe they're usually for station the NPC you game with is on) you can hope to apply them to expensive wares (which can be handy when you've got discounts on station building supplies)."
Location and skill visibility for hirable, well-skilled NPCs
These options only point to NPCs with unknown skills, so there could be other NPCs available to hire within range that won't be highlighted if their skills are already known. It makes sense to use these options where there are a lot of NPCs of the type you are interested in (e.g. see sidebar for zone, or station dock menu to check platforms or station population).
Personally, I don't think the time involved in finding skilled employees via smalltalk is particularly worthwhile once we start to have more than a few ships or stations, but it's a mechanic available to us and different people enjoy different things. If I want to find well-skilled NPCs in a vanilla game after gaining some wealth, I tend to just mass-hire random NPCs and put them to work to see their skills that way (firing them if bad).
Collecting Training Manuals
Completion of the second smalltalk allows us to ask for 'Training Manuals', which are unique to Smalltalk. They are available for various potentially important skills, such as Engineering, Leadership and Morale: a Training Manual can be used to add one star to the related skill of any one of your hired NPC's primary, bold-highlighted skills (eg only Engineering for Engineers, but Leadership or Navigation for a Captain), to a maximum of 5 stars. Exactly which Training Manual you may be offered relates to the primary skills or the type of the NPC in question so it is somewhat random, in the sense that it is random as to which NPC may begin a smalltalk. Boarding experience for Marine Officers can only be gained through.. heh.. experience, and it's slow (around +(2d5+3)% per successful boarding)! So be warned!
These Manuals are only available via the Give (craftable) Gift option, after the first smalltalk was completed with a score of 8+ points in 2 minigames and if the second smalltalk was completed with a score of 4+ points in all 3 minigames. A higher (maximum?) score in the second smalltalk stage can increase the range of manuals, depending upon the smalltalked NPC's class. Otani can only pick 1 manual as the prize, no matter how good the score.