Why the random mutation?
As you've noticed, the word is actually "gwella", but the course has been showing mutated forms sometimes, so this must be just another instance of it.
Sori no idea myself.. Still a learner.
Could this also mean improvement?
No, "gwella" is the verb, shown here in its mutated form of "wella". "Improvement" is "gwelliant", plural "gwelliannau".