The question involves understanding the role of different soil layers in construction and determining which layer is compacted to enhance bearing strength and minimize settlement. Let us analyze the options:

1. Base layer: This layer rests directly on the subgrade. It provides additional support and distributes loads. However, it is not the primary layer compacted to enhance bearing capacity or reduce settlement.
2. Surface layer: This is the topmost layer, exposed to the environment. It typically includes asphalt or concrete in road construction, primarily providing smoothness and durability.
3. Subgrade layer: This is the bottommost layer that serves as the foundation for other layers in pavements and structures. Compaction of the subgrade is crucial as it enhances the soil's bearing capacity and helps in reducing settlement. Thus, this is the layer commonly compacted during construction to ensure stability.
4. Topsoil layer: This is the uppermost layer of soil, rich in organic matter, typically not used in load-bearing as its properties are not suitable for structural support.

Based on the analysis, the subgrade layer is correctly identified as the layer compacted to increase its bearing strength and reduce settlement in construction work.