The organic linkage between smallholders and modern agriculture reflects a deepening of policies supporting smallholders and an enhancement of smallholder development capacity in the context of agricultural modernization. Guided by the principle of protecting the rights and interests of smallholders engaged in agricultural production, two main linkage pathways have emerged: socialized agricultural services and farmer organization. However, as farmer differentiation deepens, policies designed to promote these pathways face new adaptive challenges, with their implementation effects requiring continuous optimization, and the process of farmer occupational differentiation calling for further institutional adaptation. This study argues that optimizing the linkage approach requires grounding policy design in historical continuity and current differentiation trends, fully respecting the natural trajectory of smallholder differentiation, and shifting the policy focus toward enhancing smallholders’ decision-making power in farm management. Addressing non-market behaviors during the differentiation process can help establish an interactive relationship between smallholders’ independent decision-making and the effective allocation of market resources.