MAD works because the two parties do their best to convince the other party that they'd launch the missiles as soon as any of their allies or controlled territories are touched. If there is a crack in their resolve the other party can take a bite, then another one and then the alliance crumbles. Or they launch their missiles hoping for no retaliation.
Yes. Americans cannot find Estonia on the map, why starting World War 3 for it? Especially if it's not really clear there was an invasion, maybe there are real citizens that have some demands from their government, or some other shady things not clearly seen from afar?
