。
She smiled and accepted my modest gift.
Literal
She [topic-は] smiling my modest present [object-を] received [for-me-くれた].
ほほえむ ('to smile gently') is more delicate than 笑う ('laugh, smile broadly') — closer to a quiet, warm smile. ささやか ('modest, humble, small') is a な-adjective often used self-deprecatingly when describing one's own gifts or efforts: a politeness move that minimizes what one offers. The benefactive ~てくれる frames the receiving from the speaker's perspective: she didn't just take the gift, she did the speaker the favor of accepting it. This humble framing of giving — 'thank you for accepting my unworthy thing' — is built into Japanese gift culture, echoing fixed phrases like つまらないものですが ('it's a worthless thing, but...').