Concept:
Australia is the smallest continent in terms of land area.
Its approximate area is
\[
7.69\times10^6\ \text{km}^2.
\]
Despite being the smallest continent, it is the sixth-largest country in the world.
Step 1: Compare the areas of continents.
Among the continents,
\[
\text{Asia}>\text{Africa}>\text{North America}>\text{South America}>\text{Antarctica}>\text{Europe}>\text{Australia}.
\]
Step 2: Identify the smallest continent.
Hence,
\[
\boxed{\text{Australia is the smallest continent by area}.}
\]
Therefore, the correct option is
\[
\boxed{(D)\;\text{Australia}.}
\]