Whether you are the plaintiff or the defendant, you can choose to have your small claims case mediated either before or after the case has been filed. If you have your case mediated from the beginning and you reach an agreement, then the case is resolved and there is no to file in Small Claims Court at all. Even if a case has been filed and there is a court date, you can meet with a mediator and try to resolve the case before the court date. If you reach an agreement, the case can be dismissed at the mediation and the agreement reached can be entered into the court record without having to appear in court.
The advantage of mediating is that you control the outcome of the case, not the judge, so you can be creative in finding a solution unique to your situation. Often, the parties are much more satisfied with the outcome, than if a judge decided the case and forced a decision upon them.