How the Depletion Region is shrinked when Diode is in forward biased?
Without any voltage between the diode terminals there is an internal voltage across the pn junction caused by diffusion (diffusion voltage). This voltage leads to a stop of the diffusion process and causes a state of equilibrium - and results in a zone of depletion.
Now - when we connect a voltage between the outer terminals in a direction opposite to the diffusion voltage the depletion zone is shrinked because the outer voltage acts against the internal diffusion voltage (two voltages in series with different polarities). The polarity of this voltage is called "forward bias".