Business partner (BP) data model in SAP S/4HANA is extensive data model covering all required business entities and attributes of business partner. The business partner data model of all other connected applications may not be that much extensive. It means that BP data model of an application may contain small number of entities and attributes which could be a subset of entities and attributes in S/4HANA BP data model.
Reduced data model refers to this subset data model. It could also be that applications may pass only partial entities/attributes while changing business partner in S/4HANA. When such applications having reduced data-model want to change business partner data in SAP S/4HANA, it requires special handling.
When calling applications have to replicate partial data; they can send partial data by setting the Complete Transmission Indicator (CTI) as “false”. In this case, the partial data is updated and remaining data is retained in S/4HANA. When calling applications send data with CTI as “true” they shall send full data.
May also refer to the note - https://launchpad.support.sap.com/#/notes/2659038 for further details .