Metaphorically goods flow from primary producers (eg farms) to manufacturers, to wholesale, to retail (eg supermarkets) to customers.
Consider Farm -> Dairy -> Supermarket (and follow the milk stream/flow) The Farm and the Dairy are upstream of the Supermarket. The Farm is upstream and the Supermarket downstream of the Dairy. Both the Dairy and the Supermarket are downstream of the Farm
Playing "Upstream" means doing business with companies near the start of the list: ie working with producers and manufacturers and wholesalers (and delivering to restaurants), rather than delivering (from restaurants) to the final customers.
Upstream and downstream are relative terms. So the dairy is downstream of the farm, but upstream from the supermarket.