Hello and welcome to the forums.
Normally I would refer you to the Science Buddies sections on how to create your question and hypothesis (you've read these already, it seems). From the title of you post I can get both of these things. "How Light-Emitting Diodes Fade as Temperature Increases" yields the question: "Does LED flashlight's light fade as it's temperature increases" and hypothesis "I think that an LED flashlight's light will (or won't) fade as its temperature increases."
As to what's going on, here's what the project says:
No matter what their efficiency, LEDs do radiate heat at their base though, at many other frequencies other than infrared, with the result being that some portion of the input energy goes toward producing visible light, and the rest is spent generating heat. ... as the temperature increases, an LEDs efficiency and brightness decrease.
I've tried to find a good, simple explanation for what's going on in the LED as its temperature rises. I've found some data by looking at articles about solar cells (which are made similarly to LEDs). Here are some quotes:
semiconductors offer more resistance in extreme heat, making them less efficient ... The Physics Hypertextbook explained that as temperature in a conducting material increases, quasiparticles, called phonons, are excited and move throughout the material, impeding the uniform movement of electrons.