A new study has shown that millions of pieces of junk floating in space could be a big hazard for satellites orbiting Earth.
Is there an implicit 'which are' in front of floating in space? Why is 'which are' not written?
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This is a reduced relative clause. We delete unnecessary elements of sentences to make them shorter and easier to read. The missing words are which are or that are.
This is a participle clause performing as a reduced defining relative clause. The verb floating is a present participle, ing form, and replaces the longer and in this case the more awkward which are or that are. It is a defining relative clause as you are clarifying to the reader which junk you are talking about i.e., the junk floating in space, as opposed to the junk lying in your garden.