Hello Jonathan,

You can use Bonded Contact to connect the top face of the small block to the bottom face of the long block if the faces are touching, assuming you are showing an exploded view.  If the two faces have the gap shown, you could use a Fixed Joint to connect the two faces, but you might want to use the end face of the long block in that case to avoid stiffening the block with the joint connection elements.

You seem to be describing a simple link that rotates on a Revolute Joint at the center of the cylindrical surface of the small block.  If that is the case, rotation about that axis causes no stress. You could solve the motion using Rigid Dynamics, for example, allowing the link to swing as a pendulum if you were to turn on gravity in the -Y direction.

If the end of the long block is not traveling in a circle, but instead had a remote displacement that held it at a fixed Y displacement of 0 and left all other degrees of freedom Free, then you could also apply the Moment you show and the long block would bend and the short block would rotate on its Revolute joint axis.