With the increasing number of satellite launches, especially in Low Earth Orbit (LEO), optical tracking can offer a convenient enhancement of tracking precision and availability. Spaceborne active illumination devices, such as LED payloads, can offer a significant improvement to optical observations, extending the observability interval to the whole eclipse time and performing optimized flash sequences for identification, orbit determination, attitude reconstruction or low data rate communication. The main features of LED panels for optical tracking mounted on small satellites platforms (and with particular regards to nano-satellite platforms) are outlined in this paper, along with the description of the design drivers. The analysis of the performance is referred to Sun-Synchronous (at 700 km of altitude) and International Space Station (400 km) orbits, while the ground segment and the optical link budget reference design relies on a standard university space debris observation station architecture. The paper also outlines the advantages of using different observation techniques and the variety of flashing patterns. The LEDSAT 1U CubeSat, aiming at demonstrating the effectiveness of an LED-based payload for observation and tracking, is used as a study case for examples of the LED payloads and related operations that are reported and described in this paper.