Yes, pipe lining does reduce the pipe diameter slightly, because a cured-in-place liner adds a thin layer to the inside of the existing pipe. The loss is small, and the smooth new surface usually carries as much water as before, or more, since the old corroded or scaled wall it replaces was rough and slowed flow.
How much the diameter drops depends on the liner’s thickness, which is set by the pipe size and the strength the line needs. In a typical residential sewer that added layer is thin, so the inner bore shrinks only a little. The way the liner is formed inside the old pipe is covered in how cured-in-place lining is installed.
The more useful question is whether that smaller bore cuts flow, and usually it does not. Flow in a gravity sewer depends heavily on how rough the inside wall is, a property engineers measure with Manning’s roughness coefficient. A corroded cast iron or root-filled clay pipe is rough; a cured liner is very smooth, with a coefficient near 0.009 to 0.010. Because carrying capacity rises as roughness falls, industry hydraulic analyses find flow holding steady or increasing even though the bore is slightly smaller.
On large municipal jobs, crews have recorded capacity rising after lining: one Milwaukee sewer relined from 120 inches to 110 inches still carried more water because the new wall was smoother. The limit is honest, though. If a line is already undersized, partly collapsed, or needs a thick structural liner, the lost diameter can matter, so a camera inspection and proper sizing come first. Lining cannot add capacity to a pipe that was already correctly sized and clean; the gain comes from replacing a rough, scaled interior. So sewer pipe lining is matched to the pipe after an inspection.