How to make “upgrade safe” theme for a plugin?

They just mean that you can create your own template for the plugin in a child theme so that the template isn’t changed when the plugin is updated. This is both the ‘upgrades safe’ and ‘industry standard’ technique being described.

What specific file you need to create, and what needs to be in it, is specific to the plugin, and you’ll need to ask the author or consult its documentation.