Land makes up the smaller portion of the earth's surface.
Literal
Land [topic-は] earth-surface [possessive-の] smaller portion [object-を] occupies.
地表 (earth's surface) is a scientific term: 地 (earth) + 表 (surface). 小さいほうの部分 (the smaller portion) uses ほう for comparison. 占める (to occupy/account for) is standard for describing proportions.