[guided]We now explain why the vector field has a flow for the full interval $[0,1]$ after shrinking the starting neighbourhood. This is the only delicate local point: a general vector field on $U$ may flow a chosen point out of $U$ before time $1$, and shrinking the initial neighbourhood would not fix the trajectory of that point. Here the repair is that $X_t(x_0)=0$ for every $t$.
Choose $r>0$ so that
\begin{align*}
\overline{B}(\varphi(x_0),r)\subset \varphi(W).
\end{align*}
Let
\begin{align*}
Y:[0,1]\times B(\varphi(x_0),r)\to\mathbb R^m
\end{align*}
be the coordinate representative of $X$, namely
\begin{align*}
Y(t,z)=d\varphi_{\varphi^{-1}(z)}\bigl(X_t(\varphi^{-1}(z))\bigr).
\end{align*}
Because $X_t(x_0)=0$, we have
\begin{align*}
Y(t,\varphi(x_0))=0
\end{align*}
for every $t\in[0,1]$.
The map $Y$ is smooth, so its first derivatives in the spatial variables are bounded on the compact set $[0,1]\times\overline{B}(\varphi(x_0),r)$. Hence there is a constant $L>0$ such that
\begin{align*}
|Y(t,z)-Y(t,z')|\le L|z-z'|
\end{align*}
for every $t\in[0,1]$ and all $z,z'\in\overline{B}(\varphi(x_0),r)$. This is the uniform Lipschitz estimate that controls how fast trajectories can separate from the constant trajectory $z(t)=\varphi(x_0)$.
Choose $\rho>0$ with
\begin{align*}
0<\rho<r e^{-L}
\end{align*}
and define
\begin{align*}
V=\varphi^{-1}\bigl(B(\varphi(x_0),\rho)\bigr).
\end{align*}
For $x\in V$, let $z_x:[0,T_x)\to\varphi(W)$ be the maximal solution of
\begin{align*}
\frac{d}{dt}z_x(t)=Y(t,z_x(t)),\qquad z_x(0)=\varphi(x).
\end{align*}
Local existence and smooth dependence for time-dependent ordinary differential equations gives this solution for at least a short time, and it is smooth in the initial point $x$.
As long as the solution lies in $B(\varphi(x_0),r)$, the Lipschitz estimate with $z'=\varphi(x_0)$ gives
\begin{align*}
|Y(t,z_x(t))|\le L|z_x(t)-\varphi(x_0)|.
\end{align*}
Thus the distance from $z_x(t)$ to the fixed point $\varphi(x_0)$ satisfies the differential inequality
\begin{align*}
\left|\frac{d}{dt}|z_x(t)-\varphi(x_0)|\right|\le L|z_x(t)-\varphi(x_0)|
\end{align*}
at all times where $z_x(t)\ne\varphi(x_0)$. At times where the distance is zero, the same estimate is interpreted through the upper Dini derivative, which is enough for Gronwall's inequality. Therefore
\begin{align*}
|z_x(t)-\varphi(x_0)|\le e^{Lt}|z_x(0)-\varphi(x_0)|.
\end{align*}
Since $t\in[0,1]$ and $x\in V$, this yields
\begin{align*}
|z_x(t)-\varphi(x_0)|<e^L\rho<r.
\end{align*}
So the trajectory cannot hit the boundary of the coordinate ball before time $1$.
The ordinary differential equation continuation criterion says that a maximal solution can fail to extend only by leaving every compact subset of the domain of the vector field. Here the trajectory remains in the compact set $\overline{B}(\varphi(x_0),e^L\rho)$, which is contained in $B(\varphi(x_0),r)\subset\varphi(W)$. Hence the solution exists on all of $[0,1]$. Defining
\begin{align*}
\psi(t,x)=\varphi^{-1}(z_x(t))
\end{align*}
gives a smooth map $\psi:[0,1]\times V\to U$, and the initial condition gives $\psi_0=\operatorname{id}_V$.[/guided]