Catalyzes the conversion of 7,8-dihydroneopterin to 6-hydroxymethyl-7,8-dihydropterin. Can use L-threo-dihydroneopterin and D-erythro-dihydroneopterin as substrates for the formation of 6-hydroxymethyldihydropterin, but it can also catalyze the epimerization of carbon 2' of dihydroneopterin to dihydromonapterin at appreciable velocity. 7,8-dihydroneopterin = 6-hydroxymethyl-7,8-dihydropterin + glycolaldehyde 7,8-dihydroneopterin = 7,8-dihydromonapterin Cofactor biosynthesis; tetrahydrofolate biosynthesis; 2-amino-4-hydroxy-6-hydroxymethyl-7,8-dihydropteridine diphosphate from 7,8-dihydroneopterin triphosphate: step 3/4. Homooctamer. Belongs to the DHNA family. Extended N-terminus.