Many animals rely on persistent internal representations of continuous variables for working memory, navigation, and motor control. Existing theories typically assume that large networks of neurons are required to maintain such representations accurately; networks with few neurons are thought to generate discrete representations. However, analysis of two-photon calcium imaging data from tethered flies walking in darkness suggests that their small head-direction system can maintain a surprisingly continuous and accurate representation. We thus ask whether it is possible for a small network to generate a continuous, rather than discrete, representation of such a variable. We show analytically that even very small networks can be tuned to maintain continuous internal representations, but this comes at the cost of sensitivity to noise and variations in tuning. This work expands the computational repertoire of small networks, and raises the possibility that larger networks could represent more and higher-dimensional variables than previously thought.