As others said, it's supposed to be that way, but it really doesn't look intentional, does it? I mean, if her leg was raised, it'd have to either be bent at the knee or at a sharper angle away from her body. As it is, it just looks shrunken!
As a kid, I owned baby Beachball, and I really thought the small leg was some kind of factory screw-up. I was pretty surprised when I started collecting and saw by the photos on Dream Valley that it was normal! Don't get me wrong, it's my favorite baby pose, but I don't know what the sculptor was thinking with that leg!