Shrink is an Arcade Custom game mode. It is called shrink because in it you shrink depending on your rank. The smaller you are, the lower your rank, and the player who is in first is regular-sized. This mode is introduced in TimeSplitters 2 and then also appears in TimeSplitters Future Perfect.
Shrink is a Deathmatch variation, in that that it works exactly like deathmatch, except you shrink as you go down in the ranks. As in deathmatch, there is a preset kill limit which the player must achieve first, or a time limit in which the player must score the most kills.
It is helpful to choose a short character, such as Robofish, because then you are harder to kill, and in case you are in last place, you will become near-impossible to hit, letting you score more kills and thus getting back in first place.