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The contactor (LC1DMK**) has a cable outlet cross section smaller than that for the cable entry for Varplus can capacitor 25 KVar 400-480VAC. How is that possible?

 According to the attached instruction sheet, the contactor (LC1DMK**) has a maximum termination cross sectional area of 10 mm² and it is possible to use 2 cables each of 10 mm². 
To answer your question, there is no problem of having different cable sizes for input/output contactor terminals as long as the cables sizes are within the sizes mentioned in the instruction sheet. 
As for the VarplusCan, and according to the attached VarplusCan user manual, the suitable size for connection cables to be used with a 25 kVAR capacitor under 400~480V is 16 mm² if the used cable was a copper cable. So our recommendation is to use a terminal strip to connect between the contactor's 10 mm² cable (whether 1 or 2 cables depending on the current carrying capacity of the cable determined by the cable manufacturer) and the capacitor. This terminal strip should be used in such a way that the input could be a cable (or 2 cables) of 10 mm² and the output being a cable of 16 mm² to be connected to the capacitor. 
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