A backlog usually means that the business is “behind” in responding to or fulfilling orders or in finishing work. In other words, there is a lot of “old” business still to be done, and so the company cannot immediately take care of “new” business; the new work gets delayed until the old work gets done. This often happens because the company is very busy, or because it has encountered some kind of problem that delays it getting things done on time. To reduce backlog means to do something to get the old work done, so that the new work can be dealt with with less of a delay.