[guided]The key algebraic step is the reindexing $i \mapsto m - i$ in the negative-exponent sum. To see why this is needed, observe that after distributing the product we have a "positive piece" $\sum_i z^{n + m + 1 - 2i}$ and a "negative piece" $\sum_i z^{-(n+1) + m - 2i}$. The exponents in the positive piece run $n + m + 1, n + m - 1, \ldots, n - m + 1$ (decreasing); the exponents in the negative piece run $-(n+1) + m, -(n+1) + m - 2, \ldots, -(n+1) - m$, i.e., $m - n - 1, m - n - 3, \ldots, -n - m - 1$ (also decreasing). To pair these into Weyl numerators of the form $z^{k+1} - z^{-(k+1)}$, we need to match a term $z^{k+1}$ in the positive piece with $z^{-(k+1)}$ in the negative piece; since the positive piece is decreasing and the negative piece (when read as $-(k+1)$) requires $k$ also decreasing in the same order, the natural pairing reverses the index of one of the two sums. Reversing the negative piece's index (i.e., reading it from the bottom up) produces exponents $-n - m - 1, -n - m + 1, \ldots, m - n - 1$, which are exactly $-(k_j + 1)$ for $k_j = n + m - 2j$ as $j = 0, 1, \ldots, m$. This reindexing — not a direct exponent identification — is the content of the telescoping.
Equivalently: one can derive the identity by writing $\chi_n \chi_m = (z^{n+1} - z^{-(n+1)})(z^{m+1} - z^{-(m+1)}) / (z - z^{-1})^2$, expanding the numerator to $z^{n+m+2} - z^{n-m} - z^{-(n-m)} + z^{-(n+m+2)}$, and observing that $\sum_{j=0}^m (z^{n+m-2j+1} - z^{-(n+m-2j+1)})(z - z^{-1})$ telescopes to the same expression. The reindexing argument used above is the cleaner version of this telescoping.
The hypothesis $n \geq m$ enters in exactly one place: it guarantees $k_j = n + m - 2j \geq 0$ for all $j \in \{0, 1, \ldots, m\}$. If $n < m$, some $k_j$ would be negative, and the same algebraic identity would still hold formally, but the summands $\chi_{k_j}$ with $k_j < 0$ would need to be reinterpreted via $\chi_{-k-2}(z) = -\chi_k(z)$ (which gives the cancellations that recover $\chi_{|n-m|} + \cdots + \chi_{n+m}$). The reduction to $n \geq m$ via tensor symmetry sidesteps this.
The arithmetic progression $\{n + m, n + m - 2, \ldots, n - m\}$ of length $m + 1$ encodes the Clebsch–Gordan rule combinatorially: tensoring $V_n$ with $V_m$ produces the irreducibles whose indices range from the maximum $n + m$ down to the minimum $|n - m|$ in steps of $2$.[/guided]