Having trouble understanding the intent of the mod. Don't you still have to dismantle the things you want to upgrade to be used in the recipes? Is this just about recycling previous items into new ones by using them as a material for the new ones?

"Is this just about recycling previous items into new ones by using them as a material for the new ones?"

Essentially yes. I hate having leftover (worse) versions of things, and not being able to use them for anything, this let's you re-use them in a cost-effective way.