If you've never heard of Lambda Calculus before, it should not come as a complete surprise you'd have trouble solving a 4kyu kata.

You don't mention in which language you're solving; any language in which Lambda Calculus is embedded may make things more complicated, but even if you're solving directly in Lambda Calculus, there's still nuances of the compiler and the syntax.

The kata doesn't even attempt to explain Church numerals; it assumes quite a lot of domain knowledge actually. Maybe it's actually worth 4kyu. :P

If you have specific questions, don't hesitate to ask. If you're completely groping in the dark, this just is not the kata for you ( yet ). There are other kata that do a better job of introducing Lambda Calculus and datatype encodings.