Point A is "upwards" of B and B is "downwards" of A if a straight channel connecting them would have flow from A to B.

Naturally the orientation varies continuously as the Firehose shifts in its bed. Naturally no one is foolish enough these days to create such hypothetical straight channels from village to village, thus the use of terms is based entirely on subjective judgement.

Out of the available nutrients, light, water etc. each organism competes to get, (sometimes literally), a bite out of the pie. Thus each species accounts for a slice of the life pie. The point about the Planet is, the size of the pie is so vastly much bigger, that there is room and enough for many more slices.

It is true that in any one niche, the most successful specie will grow to totally dominate that niche, forcing all others to near extinction. In the Firehose Fens, the niches are so constantly disturbed and perturbed, that the size of an "ecological niche" is quite small. Thus huge pie divided by small "niches" equal fantastic diversity.