This paper focuses on the optimal design of a modulated retroreflector (MRR) laser link to establish a high-speed downlink for cube satellites (CubeSats), taking into account the weight and power limitations commonly encountered by these tiny satellites. To this end, first, a comprehensive channel modeling is conducted considering key real channel parameters including mechanical gimbal error, fast steering mirror angle error, laser beamwidth, MRR area, atmospheric turbulence, and channel coherence time. Accordingly, a closed-form expression for the distribution of the received signal is derived and utilized to propose a maximum likelihood based method to sense and estimate the initial position of the satellite. Subsequently, the distribution of the distance estimation error during the sensing phase is formulated as a function of the laser beamwidth and the gimbal error, which enables us to fine-tune the optimal laser beamwidth to minimize sensing time. Moreover, using the sensing and initial satellite distance estimation, two positioning algorithms are proposed. To compare the performance of the proposed positioning method, we obtain the lower bound of the positioning error as a benchmark. Finally, by providing comprehensive simulations, we evaluate the effect of different parameters on the performance of the considered MRR-based system in both the sensing and positioning phases.