Why does it say REDUCE instead of INCREASE?

If you reword his hypothesis, it is saying: "As the light intensity increases, the abundance of primrose plants increases".

Rewording his assumption, it is saying: "As the density of plantation increases (due to canopies), the intensity of light decreases".

The two are compatible.

And I'm going to assume later on in the question, there is a change in the light intensity as the density increases, which supports his hypothesis, since abundance is highest in high light intensity and lowest in low light intensity.

Essentially:

i) they observe the light intensity affects number of plants growing
ii) they notice some plants grow in more areas than others
iii) they conclude this is due to the lighting and suggest a hypothesis that MORE LIGHT = MORE PLANTS
iv) in the answer the student writes about an INCREASE OF ""SHADE"" DENSITY, which would REDUCE LIGHT DENSITY
v) thus they could experiment using these low light-density areas to see if there are less plants than high light-density ones.

Shade density is totally the wrong word but I know what I mean

I tried to write it as simple as poss.

I think what s/he is trying to say is this:

"Assuming there is a gradual increase in density of primrose plants with light intensity and that light intensity decreases with canopy density."

The original is poorly worded. A scientist's job is to express what they mean clearly, so this student has some work to do.