'We acquire … language by understanding input that is a little beyond our current level of (acquired) competence.' What is this pedagogical concept known as?

This is Stephen Krashen's famous Input Hypothesis (also called the i+1 hypothesis), which states that language acquisition occurs when learners understand input that is just slightly above their current competence level (i+1). The Output Hypothesis (Swain) emphasises learner production. The Interaction Hypothesis (Long) emphasises negotiated interaction. The wording in the question directly matches Krashen's Input Hypothesis.