[guided]The purpose of this step is to check that the proposed projective coordinates really are coordinates. Fix $i$ with $0 \leq i \leq n$. A point of $U_i$ has a representative $(x_0,\ldots,x_n)\in K^{n+1}\setminus\{0\}$ with $x_i\neq 0$, so we may normalize by dividing all coordinates by $x_i$. This produces
\begin{align*}
\left(\frac{x_0}{x_i},\ldots,\frac{x_n}{x_i}\right),
\end{align*}
whose $i$-th coordinate is $1$. Deleting that coordinate leaves an element of $K^n$, and this is $\varphi_i([x_0:\cdots:x_n])$.
We must first verify that this does not depend on the representative. Suppose $(y_0,\ldots,y_n)$ is another representative of the same projective point. Then there is $\lambda\in K^\times$ such that $y_m=\lambda x_m$ for every $m$. Since $x_i\neq 0$, also $y_i\neq 0$, and for each coordinate index $m$ we have
\begin{align*}
\frac{y_m}{y_i}=\frac{\lambda x_m}{\lambda x_i}=\frac{x_m}{x_i}.
\end{align*}
Therefore the normalized coordinate tuple is independent of the chosen representative.
Now define an inverse map $\psi_i:K^n\to U_i$. Given $a=(a_0,\ldots,a_{n-1})\in K^n$, insert a $1$ in the $i$-th coordinate slot to obtain a vector $\widetilde a\in K^{n+1}$. Explicitly, the coordinates before slot $i$ are $a_0,\ldots,a_{i-1}$, the $i$-th coordinate is $1$, and the coordinates after slot $i$ are $a_i,\ldots,a_{n-1}$. Set
\begin{align*}
\psi_i(a):=[\widetilde a].
\end{align*}
Because the $i$-th coordinate of $\widetilde a$ is $1$, this projective point lies in $U_i$.
Applying $\varphi_i$ to $\psi_i(a)$ normalizes by the already normalized coordinate $1$ and then deletes the $i$-th coordinate, so $\varphi_i(\psi_i(a))=a$. Conversely, if $p=[x_0:\cdots:x_n]\in U_i$, then $\psi_i(\varphi_i(p))$ is represented by the normalized vector
\begin{align*}
\left(\frac{x_0}{x_i},\ldots,\frac{x_{i-1}}{x_i},1,\frac{x_{i+1}}{x_i},\ldots,\frac{x_n}{x_i}\right).
\end{align*}
This vector is $x_i^{-1}(x_0,\ldots,x_n)$, so it represents the same projective point as $(x_0,\ldots,x_n)$. Thus $\psi_i(\varphi_i(p))=p$. The maps $\varphi_i$ and $\psi_i$ are inverse bijections, so $U_i$ is identified with $K^n$.[/guided]