エ (the big one) is used on its own as the 'e' sound.
エ can be combined with other characters to produce a different sound, ie:
ツェ - tse -> tsu + e
クェ - kwe -> ku + e
So when used in conjunction with another character the ェ (small one) is used. I'd be happy to hear the natives' interpretation of this as mine is just hypothesis.
In your example, both of these terms sound like "western"
ウエ - > u + e
ウェ - > we
Similar sounds if not identical. Probably the difference between 'color' and 'colour'. One is just used more than the other.
Pretty close. Consider it to be 2 different pronunciations of the same word that are spelled somewhat differently. Like some people say "to-ma-to" and others say "to-may-to" but it means the same thing. In this case, they actually spell it differently too.
Like fab says, one is just used more than the other. I suspect that OVT is putting the two together into one OVT result which is why you don't see the variant.
Yep, this is the same kind of issue I found when I got ソフトウエア.jp (software)
It's more like "soft-u-e-a" notice the エ in the middle. Actually I thought this was a typo, but found many companies using it on the web.
My Japanese friends all said it's OK, and had trouble explaining the difference between this and the one I thought was "the right one". Just a bit less frequently used that's all.