It's called Small Caps
In typography, small caps (short for "small capitals") are lowercase characters typeset with glyphs that resemble uppercase letters (capitals) but reduced in height and weight, close to the surrounding lowercase letters or text figures.1 This is technically not a case-transformation, but a substitution of glyphs, although the effect is often simulated by case-transformation and scaling. Small caps are used in running text as a form of emphasis that is less dominant than all uppercase text, and as a method of emphasis or distinctiveness for text alongside or instead of italics, or when boldface is inappropriate. For example, the text "Text in small caps" appears as Text in small caps in small caps. Small caps can be used to draw attention to the opening phrase or line of a new section of text, or to provide an additional style in a dictionary entry where many parts must be typographically differentiated.
These are small caps, although it's not so obvious in this font because the small caps are rather high relative to the x-height (height of the lower-case letters). Many book fonts like Bembo have lower small caps, at the x-height or only slightly taller. It's possible the font didn't have properly designed small caps glyphs and the program making the document did "fake small caps" by just scaling down the capitals. Real small caps (first line) are designed slightly differently to capitals: they're more squat, wider and with less fine detail.