Install and activate the plugin.
Go to Posts > Batch Category Import
There's the help text you quote above and then a text box.
When I put the following into the text box
Parent Category C -> Child Category D -> Grandchild Category E
Category with a very long name$cat-long
I get the message:
Request returned with the following result:
#0 Created: Category A
#1 Created: Category B
#2 Created: Parent Category C Child Category D Grandchild Category E
#3 Created: Category with a very long name
#4 Could not create category.
[Message #4 may have been due to a blank line entered into the text box.]
All 6 categories (including parent, child, and grandchild) *were* created, but the parent/child relationship on line #2 was not created.
I tried again taking out the spaces surrounding the "->" tokens, but that didn't help -- again the categories were created, but the relationships were not.
The plugin FAQ has a more "user friendly" version of the help text that appears at the start of the plugin page -- that may be the "simple terms" you're asking for. But it does appear there's a bug related to nested categories and the error message generated by a blank line seems odd.
If that's not enough information, it'd help for you to describe what you're trying to accomplish by using the plugin. There may be other plugins that accomplish your goal.