By way of contradiction, suppose $f$ is surjective.
Then $\forall x,y \in X$, we have $x_0,y_0 \in X$ such that $f(x_0)=x$ and $f(y_0) = y$. Then
$$d(x,y) = d(f(x_0),f(y_0)) < d(x_0,y_0)$$
Define the constant $M$ by
$$M := \sup_{(x,y) \in X \times X} d(x,y)$$
This exists since, trivially, the set of distances is nonempty. However, since metrics are continuous function and $M$ is compact, $d$ attains its supremum, and thus we may claim
$$M = \max_{(x,y) \in X \times X} d(x,y)$$
Thus, there exist some $x^*,y^*$ such that $d(x^*,y^*) = M$. However, there always exists a pair $(x_0,y_0)$ for any $(x,y)$ such that $d(x,y) < d(x_0,y_0)$. A contradiction is reached, and $f$ cannot be surjective.
Perhaps an example would be enlightening.
An easy one would be to take $X = [0,1]$ with the usual Euclidean metric $d$, and the function $f(x) = x/2$. Clearly meets the contraction criteria, but, for instance, is there $x$ such that $f(x)=1$?
I say contraction criteria because one may define a mapping $f$ to be a contraction on a metric space if $d(f(x),f(y)) \le k \cdot d(x,y)$ for every $x,y$ and for $k \in (0,1)$. Your function meets this criteria. Notice how, intuitively, the function $f$ "shrinks" the space, and reduces the distances between points.