This is expected behaviour. When you reduce the retention policy or manually clean out backup versions from your backup drive, the free space available will not be reflected.
The reason behind this is that these operations will instead mark the blocks pertaining to selected backup versions in our backup database as free to be used by your next backup operations. Hence, the used space on disk will not change.
This is done instead of performing a disk clean-up operation each and every time, which can be expensive. Should you need to shrink the backup database to reclaim space on disk, kindly follow this guide.