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She's on a diet, so she's cutting back on sweets.
Literal
She [topic-は] [dieting-ダイエット中] [is-because-なので] sweet things [topic-は] [is-cutting-back-控えている].
なので is the explanatory connector for nominal/な-adjective predicates: 'X is the case, so Y.' Compare with から ('because'), which is more direct — なので feels softer and more contextualizing. The contrastive は on 甘い物 ('sweet things') signals 'as for sweets specifically (as opposed to other foods)' — the implication is that other foods are still on the menu. 控える ('hold back, refrain from, restrain') with food/drink takes the meaning 'cut back on,' rather than its other senses ('keep in mind,' 'wait nearby,' 'have impending'). ~中 marks her current state of being mid-diet.