Smallest embedded processor with built-in bluetooth

There are some TI MSP430's with the BT protocol stack inside. You still need the RF stuff in a separate package. You might take apart a cheap BT cellular phone earpiece to see what kind of stuff they use in it. I doubt that there's more stuff than there really has to be.

I agree it would be neat to have a processor and BT in a single small module but I've never come across anything like that.

You can usually search on the package type. You can also get bare dice and use chip-on-board assembly. For small runs I believe that is rather expensive, but not compared to getting a custom chip made. For big runs it is quite economical.

Check TI CC2541 and Nordic Semi nRF51822. nRF is available in 3.5x3.8mm WLCSP package.

Wow, that nRF is really interesting. Any idea what it costs, and whether it is feasible to deal with WLCSP assembly in prototype quantities without spending a fortune?

Self-followup: it's listed at Mouser starting around $2 in 1k quantity or $4 in unit quantity. Not bad at all, and there is a $99 development board. This is quite interesting and it seems to fill a void that's existed for a while. I'm still wondering about the WLCSP issue, also in relation to some other devices in that format.

That's a really cool-looking board, but as small as it is, I think it's still too big for some typical wearable applications such as earpieces and wristwatches. WLCSP seems like the right way to do it.