We study the compact embedding between smoothness Morrey spaces on bounded domains and characterise its entropy numbers. Here we discover a new phenomenon when the difference of smoothness parameters in the source and target spaces is rather small compared with the influence of the fine parameters in the Morrey setting. In view of some partial forerunners this was not to be expected till now. Our argument relies on wavelet decomposition techniques of the function spaces and a careful study of the related sequence space setting. , extended by M ∞,∞ (R d ) = L ∞ (R d ). In a parallel way one can define the spaces M ∞,p (R d ), p ∈ (0, ∞), but using the Lebesgue differentiation theorem, one arrives at M ∞,p (R d ) = L ∞ (R d ). Moreover, M u,p (R d ) = {0} for u < p, and for 0 < p 2 ≤ p 1 ≤ u < ∞,Now we present the smoothness spaces of Morrey type in which we are interested. The Schwartz space S(R d ) and its dual S ′ (R d ) of all complex-valued tempered distributions have their usual meaning here. Let ϕ 0 = ϕ ∈ S(R d ) be such that supp ϕ ⊂ y ∈ R d : |y| < 2 and ϕ(x) = 1 if |x| ≤ 1 ,