Small towns accessible via train from Madrid

Toledo is certainly worth that much time. Whether it fits your definition of "small" I do not know. And it is a very popular day-tip destination, so you must get off the direct path between Zocodover Square and the cathedral.

I also found Segovia interesting, but it's another popular day-trip destination.

Less visited, but not undiscovered is Cuenca, which is on the AVE (fast-train) line between Madrid and Valencia. It's historic district is perched on a hill along a ravine. Very atmospheric. There are a couple of good, small, modern-art museums. The rail ticket to Cuenca will be rather expensive if bought late. Early purchase will yield a promo fare.

I've spent less time in Alcala de Henares, an historic university town reached by very frequent local trains from Madrid.

Smaller and more obscure is Chinchon, but it's awfully small for a 2- or 3-night stay.

Thank you! I will look into those recommendations. Toledo looks amazing but seems large.

In addition to those mentioned,
Salamanca( not small), Avila.

Here's a smaller town that's definitely off the beaten path - Calatayud, it's about 1 hr northeast of Madrid. I've passed through it a few times, it has some very interesting Mudejar architecture, a medieval castle, and is in the heart of Calatayud DO Wine Region.

I'll throw in Sigüenza, a cute medieval village / small town where you can stay in the Parador Hotel, which is in an old castle. More of a one night affair though, but it's only 1.5 hours from Madrid Chamartin Station by train.

Thanks everyone! I’m going to research and find my best options. I appreciate your help!

Consider Cordoba. While it's not a small town, the historic center and the neighboring new center feel that way. Pedestrian streets, narrow byways, a quiet atmosphere especially in the evenings, all give it a small town feel. And it has the unique Mezquita, certainly worth visiting when you are in Spain, especially when you are only a couple hours away by train.

If you're getting to Madrid by midday, you might consider going on to another town that first day rather than having a one-night stay, especially if you're going to have to kill time until you can check into your lodging in Madrid for that first night.