There are good reasons for the reduction in capacity.
First of all, NW's five year average attendance is only a little over 36,000. In 2021 and 2022 NW averaged about 30,000 a game. Northwestern's student population this year is only 22,732. It has always been a small, very selective school. There's absolutely no reason for NW to have a big stadium. A big stadium just gives opposing fans more opprtunity to completely ruin any home field advantage. In short, it's simply stupid to build a larger stadium unless a school is confident most of it will be filled by their fans.
Secondly, the vast majority of fans everywhere want (and need) more room! The average American is much wider than 100 years ago. Self reported weight has increased 20 lbs since 1990, never mind the massive difference in average height/weight from when Ryan Field opened in 1926 to now.
Fans told NW they want wider seats, wider concourses and amenities like non-traditional seating areas, and pre and post-game tailgating areas inside the stadium. Unlike the old stadium, this one's also going to have a canopy. Engineering firm HNTB states fans will actually be closer to the field, and the new stadium won't have any obstructed view seats. Ryan Field will also be completely ADA compliant.
Lastly, this project is only happening because the Ryan family donated $480 million. Under the terms of the gift, NW can't use all of that for the stadium. Even if they wanted to build a larger stadium, they don't have the $$ to build it without doing something stupid, like taking on debt.