As far as I understand, the difference is that in our reality and perception, all strangers are 'bad' by default, they want to hurt us, they are suspicious etc. But if we know each other closer, if we confirm that the other guy is a good guy, then we can relax, talk, smile etc.

In your culture you tend to think that all strangers are good by default, they are harmless, they are kind and interesting, hence you are trying to be polite with them. But if you know each other closer and you find out that the other guy is not a good guy, then you stop being polite.

So, basically we are coming from the opposite directions :)

I'm a kiwi, and I even I don't know why we engage in smalltalk.

Upon saying that, I enjoy smalltalk. Every morning when I come into work, I'll usually talk some bullshit about the weather, or earthquakes, or something topical.

So I guess the reason we do it is because we enjoy it?

I'd like to know...