I currently have a VDP 6.1 appliance with 12TB of stoage capacity. I'm using less than 1TB (it has been set up for a year). Is there a way to reduce the capacity? Ideally, I would like to reduce it to 4TB.
Storage can be increased in VDP. It cannot be decreased. Maximum available on VDP is 8 TB (Which deploys 12; +4 of overhead for maintenance).
If you would like to reduce, then it's a redeploy.
Another possible option is to deploy a new, smaller VDP appliance and replicate the backup data from the old to the new. You will have to recreate backup jobs, etc., but you will at least have the backup data/restore points from the old appliance available in the new appliance.