Evaporating and boiling of droplets on heated surfaces are widely involved in many industrial applications. In this work, the phase change characteristics inside the small droplets in the nucleate boiling regime are studied experimentally and numerically. Confined by the free surface of the droplet, the bubble dynamics in the small evaporating droplet is found experimentally to be greatly different from those observed in pool boiling. After the droplet is deposited on the heated surface, nucleate bubbles generate immediately on the droplet bottom, and then they grow fast and coalesce into large bubbles. However, unlike pool boiling, once the bubbles grow to a specific size, they stop growing and always attach to the heated surface until the droplet evaporates to a thin liquid film, subsequently the bubbles start shrinking, collapsing and finally disappearing due to the confined effects induced by the thin film free surface. With such bubble dynamics, the heat transfer rates of the fast initial bubble nucleation stage and the last thin film evaporation stage are almost four times as large as the middle stable bubble stage. A numerical model is proposed to understand the confined boiling mechanisms with flow and temperature details. The results show that the confined boiling can be attributed to either the evaporation condensation competition, or the jetting flows induced by the Marangoni convection inside the droplet. The bubble bottom evaporates while the top condensate when its top enters the droplet subcooled region; thus, the bubble seems to stop growing. The jetting flow due to the Marangoni flows further inhibits the bubble growing by pumping the cooled liquids from the top of the droplet onto the bubble surface. For hydrophobic surfaces, the Marangoni effect dominates the bubble dynamics within the evaporating droplet. For hydrophilic surface, the evaporation-condensation competition dominates the bubble dynamics inside the evaporating droplet. (C) 2017 Elsevier Ltd. All rights reserved.