Psychological Meanings:

Contempt The dream of reduction has several different meanings, therefore, it is always important exactly to pay attention to the whole connection: a person or a thing is reduced in the dream. If the person is smaller in the dream than in reality, then this is a sign of the dreamer’s feeling of inferiority. He may be angry in the real life or perhaps feels the disdain to this person.

Losing yourself To be smaller yourself then this may be a sign that you shrink and lose your original personality, until you ultimately entirely loses it.

* Please, see meaning of giant, dwarf.