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I.e., "We cause it to contract in accordance with the 'laws of nature' which We Ourselves have instituted." As in so many other instances in the Qur'an, the abrupt change from the third-person pronoun "He" to "We" is meant to illustrate the fact that God is undefinable, and that it is only the inadequacy of human speech - and, hence, of the human mind - that makes it necessary to refer to the Supreme Being by pronouns which in relaity are applicable only to finite, created "persons" (cf. Foreword, note [2]).
This means that one of the great miracles of Allah is that He allows the sun to rise in the morning, causing darkness to retreat. He could have stopped the sun and the earth from rotating, so half of the world would be engulfed in complete darkness, leading to an imbalance in the earth’s eco-systems and endangering life on the planet.
The shadows are constantly in a state of flux; so are all things in Creation, all things we see or covet in this life. Allah, if He wills, can give some of them greater fixity or comparative stability.
As the sun rises higher and higher, the shadows contract. In regions where the sun gets actually to the zenith at noon, there is no shadow left at that time. Where does it go to? It was but a shadow cast by a substance and it gets absorbed by the substance which produced it.