Is the smaller space inside the hedgehog house for feeding or sleeping

If the Hedgehog House has a divider in the main housing area then this can be used for either Feeding or Nesting.

Hedgehogs tend not to prefer to nest in a separate area from where they eat, so don't worry about your Hedgehog House doing both.

The best option would be to get two Houses, more info on using your hedgehog house can be viewed here: https://homeandroost.co.uk/blog/hedgehog-house-guide/