Why does a turbofan engine force bypass air into a smaller space?
It can't increase thrust, can it?


It does increase the thrust. This is how jet propulsion works. The decreasing space is essentially a nozzle, without one the jet engine is a mere gas turbine.


You could theorize an infinitely narrowing space and thrust would approach infinity.


Not really, a very tight opening will create a huge back pressure, initially and very momentarily propelling the vehicle the opposite direction, before the gases shoot out the front stalling the engine (gases building up).

In fluid dynamics that would be a choked flow state. The mass flow out the nozzle reaches the maximum, which means inside the engine the gases will start building up (pressure increasing). If the theoretical tiny nozzle can withstand this pressure, the gases will only have one way to go, which is out the front.

So instead the nozzle is designed to decrease the pressure (by increasing the velocity) to match the free stream pressure as much as possible.


  The nozzle of a jet engine is usually designed to make the exit pressure equal to free stream (NASA).