If you reduce the piping size does air pressure increase?

Assuming you mean using smaller piping in a compressed air system-- answer is no, the air pressure does not increase. In fact, the air pressure measured at the end of the line will be lower due to increased pressure drop in the smaller lines from the compressor. The air velocity in the pipes will be higher because of the reduced inside area of the lines, but the actual pressure will be lower at the exit. An air tool at the end of the line would be less powerful.