The patient’s chronic inflammatory pneumonitis is killing off his lung parenchyma (composed primarily of type I pneumocytes). Type II pneumocytes, in addition to making surfactant, can replicate in order to replace type I pneumocytes, so they will be increased. Chronic interstitial inflammation results in fibrosis, hence an increase in fibroblasts.

Hypersensitivity pneumonitis (inflammatory interstitial pneumonitis) is a hypersensitivity reaction following exposure to environmental allergens. It is associated with inflammatory interstitial lung disease. Chronic inflammatory pneumonitis leads to destruction of Type I pneumocytes, an increase in Type II pneumocytes to serve as progenitor cells to replace alveolar cells, and an increase in fibroblast proliferation.

from @melchior

From the UW ID 666 explanation, although type II pneumocytes normally differentiate into type I pneumocytes after proliferation, they do not differentiate in idiopathic pulmonary fibrosis due to altered cell signals and altered basement membrane, which is why type II pneumocytes are increased.

explanation by @benwhite_dotcom is incorrect