... imagine alien ships no bigger than an atom it it holds 2 million citizens from a far off Galaxy. ...
I think ANYTHING IN SCIENCE FICTION - BASED ON PHYSICS is possible.
The problem is that if you want to stay within the laws of physics, then you cannot, by definition, have these incredibly small universes, intelligences, etc.
The Planck Length is the smallest unit of measurement that has any meaning. Once you cross that line, you no longer operate using classical laws of physics, you've entered the realm of quantum physics, which is more bizzare in reality than any science fiction.
As physicist Neils Bohr said "Anyone who isn’t shocked by quantum physics has not understood it." Neils is the one who discovered evidence that the only time quanta (subatomic particles) manifest themselves as particles (instead of waves) is when they are being observed, i.e., they only exist if you are looking at them!
Bohr also discovered that some subatomic processes produce a pair of particles with closely related complementary properties, i.e., a change to one particle would produce a change to the other. Albert Einstein was deeply troubled by this, since this would imply the two particles were interconnected in some way with instantaneous communication, a violation of his Theory of Relatively that nothing can travel faster than the speed of light. Einstein asserted that “no reasonable definition of reality” existed that would permit faster-than-light communication.
Bohr didn’t believe in faster-than-light communication either. He argued that if subatomic particles don’t exist until they are observed, then Einstein was wrong to think of them as separate, independent “things,” rather they were part of an “indivisible system”.
David Bohm, a protégé of Einstein’s, expanded on this idea of an indivisible system. His experiments in plasma physics demonstrated that subatomic particles stopped behaving like individuals and started behaving as if they were part of a larger, interconnected whole, as if each particle “knew” what each of trillions of other individual particles were doing. As technology advanced, further experiments conclusively proved the theory that subatomic particles are “nonlocally connected,” i.e., at the subquantum level, location ceases to exist, points in space become equal to all other points in space, and it is meaningless to speak of anything being separate from anything else.
David Bohm has suggested that the tangible reality of our lives is really a kind of illusion, like a holographic image. Underlying it is a deeper order of existence, a vast and more primary level of reality that gives birth to all objects and appearances of our physical world in much the same way that a piece of holographic film gives birth to a hologram. Our world is just a projection of a deeper reality, beyond both space and time.
Head spinning yet? :)