Bujold explains this as a novella by the strict literature student's definition on the basis of length.
It takes place chronologically between the end of The Warrior's Apprentice and The Vor Game, and serves to give the reader a clear picture of Barrayar and the challenges faced by Miles.
The colonists who landed on Barrayar became isolated from the mainstream of human expansion into the galaxy and developed quite independently as a society - a society which embodies many of the ills present in our own. They also had a nuclear war at one point and there is a culturally embedded horror of mutants. In the back country, any infant with any sort of visible birth defect is typically killed at birth, regardless of the fact that they currently possess medical science to repair many of them.
Miles's physical problems are the result of a chemical attack on his parents while his mother was pregnant, but that distinction doesn't mean much to most citizens of Barrayar.
In this story, Miles's father sends him out to the back country to deal with a problem arising from this bias - and Miles, himself, learns a lot about Barrayar.
This is one of my favorite Miles stories - a very formative experience for him, and it plays a part in one of the later books too.
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