A simile is a figure of speech that compares two things using the words "like" or "as." In the simile "They live like small boats in very rough waters," the comparison is being made between the way that "they" live and the way that small boats might navigate rough waters.
The simile suggests that the subjects of the simile are facing challenges or difficulties in their lives, much like small boats would face challenges when navigating rough waters. Small boats are vulnerable to being tossed around and capsized by large waves, and the simile implies that the subjects of the simile are similarly vulnerable or exposed to dangers or difficulties.
Overall, the simile conveys a sense of struggle or hardship, and suggests that the subjects of the simile are facing challenges that require resilience, resourcefulness, and adaptability in order to overcome them.