The stomach is capable of stretching and contracting, and eating large meals will tend to increase the expanding capacity of the stomach. Fasting or reducing your intake will tend to quite literally lead to a reduction in total capacity as a result of increased contracture and a sort of “resetting” of your sensitivity to hunger signaling. It’s not really a matter of stretching or shrinking, but altering muscle tone and how your gut reacts to a meal.

Of course you can get the same result by just eating less, but fasting is quicker and more dramatic, not to mention that total abstinence for a short period is easier for some than fine control over a longer period.