We have contractors that work on only one project in our company. But, they can see all of the other projects we work on in our company.
How do I restrict their access to the one project that they are working on?
Jira does not restrict, it only grants permissions at the project level (issue security is a different story).
In theory, this is really simple, because all you have to do is set the permissions so that "users matching a rule can see the issue". That grants permission. It is often by saying something simple like "users in the role of 'user' in the project can see it", and then putting the users (or groups) you want into that role in the project. If you do not want to let a user into a project, then do not add them to a set that lets them in.
But.
Jira ships with some terrible defaults which automatically grant access to anyone with a login. Before you can use the simple, sane and reasonably intuitive rule above, you have to unpick these dreadful defaults, removing all the stuff that grants automatic access.
There's a good guide to it over at https://community.atlassian.com/t5/Jira-questions/JIRA-Software-project-permission-restrict-user-access-to-one/qaq-p/779572
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