Some spells, such as the Mini Mushroom (Snake Magic), give you a chance of Shrinking a monster. 
When a monster is Shrunk, its size is reduced. A mushroom icon with a counter appears in front of it, indicating how many cards you can draw before the effect ends. 
To complete the challenge that asks you to “Defeat X Shrunk monsters", you must kill a monster WHILE it is still Shrunk.
Note: If the monster is no longer shrunk when killed, then it WON'T count for the challenge.
Learn more about: How do I Shrink a monster?