I LOVE the idea of this mod. I've beaten SA 3 times now on various settings and still haven't touched quality except for armour and personal equipment, and asteroid collectors. The idea of throwing much more of the same resource for a chance to upgrade quality didn't seem very Factorio-like to me. But I have some questions

1. Is this more or less expensive than a vanilla quality upcycling setup? I imagine this varies depending on target quality and item complexity
2. My understanding is that you have to have for example to upgrade some machine to blue quality you need that green quality machine as well as green quality upgrade items. This seems super complex and expensive. Am I missing something?
3. Could I have a better explanation of how the various mod settings work because I am not very smart but I want to make upgrading simple items MUCH cheaper and complex items a little cheaper

I'm glad you like my mod!

1. I can't really tell. I mostly guessed what might be a reasonable cost for upgrading, but I haven't gameplay tested this beyond calibrated (rare) yet. The cost of vanilla upcycling depends on the level and quality of quality and productivity modules, while you can make this mod's upgrades cheaper with productivity only. So the costs would also vary throughout a game.

2. This is correct. The idea was to replace the vanilla quality upcycling with some new and increasingly complex production chains that don't make quality items too cheap or easy. If default settings are not to your liking, there are several option you can tweak:
   "Disable surface restrictions": This just allows you to craft all upgrade items and their components anywhere, which gives you more options where to build the production.
   "Simple upgrade items": This removes the need to craft intermediate components for upgrade items. With this enabled, the upgrade items are made directly with vanilla ingredients. This drastically simplifies production chains, but the intermediate components would allow you to use productivity modules in multiple crafting steps.
   "Free upgrades": No need for any upgrade items, the upgrade machine upgrade quality for free. Basically cheat mode.
   "Allow multi-step upgrades": as you noted correctly, by default you need green items and green upgrade items to get a blue item. This option allows you to skip this intermediate quality upgrade and upgrade directly from standard to blue, using standard quality items and upgrade items. In the current implementation it is not possible to combine a green item with standard upgrade items to get a blue item.

3. This is a bit complicated, but I'll try to give some intuition.
   The "complexity" of an item in this mod is simply it's cost in basic resources (which are assigned some predefined complexity). An item's complexity is the sum of the complexities of its ingredients, using the cheapest recipe.
   To compute how many upgrade items are needed to upgrade an item's quality, its complexity goes through a power function ([complexity * scale]^exponent * final_scale). The exponent effectively gives a bias towards making upgrading ingredients or finished products cheaper. If exponent>1 it would be cheaper to upgrade the ingredients before crafting a product (this is true throughout crafting chains, so you would want to always upgrade raw resources). If exponent<1, as in the default settings, it is cheaper to upgrade the final product. If exponent=0 all items would have the same upgrade cost, regardless of complexity (since x^0=1). For exponent=1 it does not matter where you upgrade quality in the production chain. The final scale just multiplies the cost of everything.
   If you want to "make upgrading simple items MUCH cheaper and complex items a little cheaper", you have to increase the exponent (to make the difference between simple and complex items larger) and reduce final_scale (to make everything cheaper). Since it is complicated to determine these values you could give me the desired upgrade costs for 3-5 key complexities (enable "log complexity" and the check the log to see the complexity of items), then I can try to fit the values for you.

Tying in with 2., there is the option "Upgrade item upgrade cost scale", which is another multiplier on the upgrade cost specifically for upgrading the upgrade items. Reducing this can drastically reduce the cost of upgrading to higher qualities when not using "Allow multi-step upgrades".
From another discussion:

upgrade costs with standard settings (10 upgrade materials to upgrade Calibration matrix and Reinforcement package, 11 for Quantum tuner):
1 normal Post processing kit: 1 normal Post processing kit
1 uncommon Calibration matrix: 10 normal Post processing kits, 1 normal Calibration matrix
1 rare Reinforcement package: 110 normal Post processing kits, 10 normal Calibration matrices, 1 normal Reinforcement package
1 epic Quantum tuner: 1331 normal Post processing kits, 121 normal Calibration matrices, 11 normal Reinforcement packages, 1 normal Quantum tuner

with "upgrade item upgrade cost scale" = 0.4 (4 upgrade materials to upgrade each):
1 normal Post processing kit: 1 normal Post processing kit
1 uncommon Calibration matrix: 4 normal Post processing kits, 1 normal Calibration matrix
1 rare Reinforcement package: 20 normal Post processing kits, 4 normal Calibration matrices, 1 normal Reinforcement package
1 epic Quantum tuner: 100 normal Post processing kits, 20 normal Calibration matrices, 4 normal Reinforcement packages, 1 normal Quantum tuner

with "upgrade item upgrade cost scale" = 0.2 (2 upgrade materials to upgrade each):
1 normal Post processing kit: 1 normal Post processing kit
1 uncommon Calibration matrix: 2 normal Post processing kits, 1 normal Calibration matrix
1 rare Reinforcement package: 6 normal Post processing kits, 2 normal Calibration matrices, 1 normal Reinforcement package
1 epic Quantum tuner: 18 normal Post processing kits, 6 normal Calibration matrices, 2 normal Reinforcement packages, 1 normal Quantum tuner