There are a couple of ways to answer your question. The first thing to consider is that your heart is pretty tiny, too, when you compare it to the size of your whole body. Your heart probably isn't much bigger than your fist. We could probably ask how you live with such a little heart! So it seems like insects have small hearts, but they really aren't so small compared to the size of their small bodies.

However, the insect heart is much less complex and not as efficient as the human heart, so your question is still a very good one. How do insects get by with a small heart that doesn't work very well? The answer to this question is that moving blood around isn't as important to insects as it is to humans. Humans use blood to carry oxygen to all of their cells. If your blood doesn't move very well, then your cells don't get oxygen and you can die very quickly. Insect blood doesn't carry oxygen, though. Insects get oxygen to their cells using tracheae, which are tiny tubes that run from the outside of their exoskeleton into every cell. So insects just use their blood to move around chemicals, food, and waste materials. It's much less important to move those things around quickly, so it doesn't really matter that the insect's puny heart doesn't work as well as a human heart.

Incidentally, this is also the reason that insects don't have red blood -- the red color of human blood comes from hemoglobin, the chemical that carries oxygen in the blood. Since insects don't carry oxygen in the blood, they don't have hemoglobin, and their blood is usually kind of clear instead of being red.