In the track quality analysis, numerical values representing the relative condition of track geometry called track quality indices (TQIs) are calculated along a specific track segment. Segments are defined as linear track geometry datasets with the homogeneous characteristics of factors affecting geometry degradation. The 200m-long analytical segment is used most often on intercity conventional and high-speed rail networks. However, in the case of the small urban rail networks, the homogeneity of track-geometry degradation influential factors is very low. This segment length is usually too long for efficient track maintenance or reconstruction with minimal disruption of the urban traffic. This paper explores the effect of reducing the analytical segment length in the condition assessment of the tram network in the City of Osijek, Croatia. The research had two main objectives: (1) to assess the narrow-gauge tram-track geometry quality through the application of the established synthesized TQIs, and (2) to analyze how a change in the analytical segment length affects this assessment. Two synthesized track quality indices—one based on a weighted value and the other on a standard deviation of measured track geometry parameters—were calculated for the 27.5 km of tracks on consecutive 200-, 100-, 50-, and 25 m long analytical segments. The comparative analysis of the TQIs’ calculation results showed that the reduction in the segment length increased the resolution of the track quality analysis in both cases, while the index based on a weighted value of geometry deviations proved less sensitive to this reduction. These results contribute to further segmentation process establishment and TQIs implementation on tram infrastructure.