<p>Hidden small faults are characterized by small displacements, complex structures, and high concealment. Reasonable coal pillar setting is one of the key technologies for preventing and controlling water inrush disasters caused by hidden small faults. In this study, based on the theories of fracture mechanics and the “lower three zones,” we investigate the water inrush criterion and waterproof coal pillar setting method for the floor with hidden small faults. The calculation of the maximum mining length (<i>L</i>) and the minimum width (<i>S</i>) of the waterproof coal pillar is regarded as the key to the safe waterproof coal pillar setting method. Through FLAC 3D numerical simulation, we study the variation laws of the plastic zones and stress distribution of the surrounding rock of hidden small faults and coal pillars during the implementation of the coal pillar setting scheme. The results show that: in deep mining faces, the formation rate of the water-conducting channels of hidden small faults is linearly proportional to the mining depth, the length of the working face, and the mining width. When the width of the safe waterproof coal pillar is at the minimum value, the shear-stress release of the floor aquifuge increases in a “sudden-change” manner. The vertical stress of the floor aquifuge with hidden small faults exhibits an “L”-shaped-shaped trend as the working face is mined. Therefore, during the mining process, the floor should be reinforced promptly, and the roof support should be strengthened to enhance the stability of the waterproof coal pillar on the floor with hidden small faults and reduce the risk of water-conducting channel formation. This study provides theoretical guidance for the prevention and control of water inrush disasters on the floor with hidden small faults.</p>