On page 28 of "Categories and Sheaves" it says:
$$ \eta : L R \to \text{id}_{C'} $$
is a functor but then they have in a commutative diagram right below that:
$$ \text{Hom}_{C'}(Y, Y') \xrightarrow{\eta_Y} \text{Hom}_{C'}(LR(Y), Y') $$
How does that make sense?
You have the morphism $\eta^Y : LR(Y) \to Y$ and you apply the contravariant functor $\mathrm{Hom}_{C'}(-,Y')$. This yields the desired morphism $$ \text{Hom}_{C'}(Y, Y') \xrightarrow{\eta_Y} \text{Hom}_{C'}(LR(Y), Y'). $$