doubt in lecture 11, deterministic noise

[rohanag]

In the lecture 11, it is mentioned that deterministic noise depends on the hypothesis set, and deterministic noise decreases as the hypothesis set becomes more complex, because the set can tackle some of the deterministic noise.
But the experiment performed on slide 7 of lecture 11 suggests that the more complex model fails badly when compared to the less complex model.

The above statements seem to contradict in my mind, I cannot put them together. Can anyone please clear my doubt. Thank you.