Why would be expect there to be fewer foxes than caterpillars in this ecosystem?

Foxes eat a variety of animals, which includes caterpillars. On the contrary, most caterpillars eat only plants. In any ecosystem, you always have a larger number of plants than the number of animals which eat plants, and you have an even smaller number of animals which eat other animals. That is related to the flow of energy in the ecosystem:

1) The sun provides solar energy and plants use part of it for photosyntesis. Later, that energy will be stored by the plant as chemical energy.

2) Herbivore animals eat some of the plants, in order to use their chemical energy. Animals can never eat all plants because that would lead to extinction. Besides, part of the chemical energy of the plants they have eaten is wasted because it converts into heat energy.

3) Carnivore animals eat herbivore animals. Same conclusion, they can never eat all herbivore animals and they cannot use all their energy. If they are ominvore, they are sort of sharing the plants with herbivores, so herbivores can eat less plants.

Malnutrition reduces the population, so less food leads to smaller population.