This was a truly esoteric question in the NSC P1 Prelim 2020. I was not aware of this setting: I have never seen this before and have also never felt the need to do something like this either!

In an Excel worksheet:

1. Select a Cell or Range
2. Activate the Home ribbon
3. Open the Format Cells dialogue window
4. Select the Alignment tab
5. Select the Shrink to fit option checkbox in the Text control group

I seriously cannot think of a scenario in which I think this is appropriate formatting. You are far more likely to use Wrap Text to fit more text into a cell and still maintain legibility (the Shrink to fit option is not available when a cell already has Wrap Text applied).