We had a great stay at Miguel's apartment. He welcomed us warmly and explained everything we needed to know. He also had bought some toiletpaper, hand soap, shampoo, coffee, tea, etc for us to use. There were also plenty of herbs&spices if you decide to cook - but we recommend to go out and enjoy Madrid's great variety of restaurants.
The apartment is like described. It's small but definately big enough for 2 and equipped with everything you need. The terrace is great - it is more like an inner mini court - with barely any sun touching it, so you can really handle the heat ouside (in May we had already 32°C) and enjoy the terrace.
The neighbourhood is quite charming and unique with lots of second hand shops around. The metro is just a short stroll down the road and from there you can reach every station quite quickly. There are two DIA markets just down the street and right outside Tribunal station there's a little market (Mercado Barcelo) where you can buy meat, cheese, fruits, bread, ...
Be aware - there's a nightclub just opposite the street and it can be a bit noisy at night. We didn't mind - Madrid is an active city that is busy 24h and we knew that, but maybe bring some ear plugs.