It indicates: "When shorter distances of single-mode fiber are used, it might be necessary to insert an optical attenuator in the link". Shorter than how much?
For long reach optical transceivers, the transmitters optical output power is greater than the receiver's input power range. To use the DWDM transceiver you linked to, this module has a transmit output power of +4dBm (max) which the receiver's input range is -9 to -28dBm.
To calculate the minimum attenuation required for this link to operate correctly:
Transmit power (+4dB) minus Receiver input power (-9dBm) = Minimum link attenuation (+13dBm).
Fiber loss is ~ 0.25dB/km (@1550nm). So, 13db / 0.25dB/km = 52km minimum link length. So if you are doing bench testing, it would be necessary to add a minimum of 13dB of attenuation to have the received power level to fall within the receiver's operating range (-9dBm to -28dBm).