That is you reading (copying) it from the NZ website, or from experience?
Experience (and lots of it). I've used many recognition upgrades over the years.
That being said the website is quite clear:
Elite, Gold and Silver Airpoints™ members receive Recognition Upgrades each membership year, as part of their membership benefits
www.airnewzealand.com.au
- On 777 or 787 aircraft operating between New Zealand and Eastern Australia or the Pacific Islands, excluding flights to Perth, Papeete, Honolulu and Bali or between Sydney and Rarotonga, members can move from Economy to Business Premier using one Recognition Upgrade
I'll explain in a little more detail below:
One class upgrade to me means that, upgrading from Economy to Business on 787 or 777 would be a 2 class upgrade.
So don't place your upgrade via the website, it causes problems and I haven't had much luck over the years. Sometimes it won't show a direct Economy to Business upgrade on shorthaul bookings so as a result, the best and simplest way is to call (which as gold is very easy).
On East Coast Australia [currently SYD/MEL/BNE] to Auckland flights, if you process it over the phone then a
single recognition upgrade is valid from Economy as an upgrade directly into Business class (obviously it's still possible to apply for an Economy to Premium Economy upgrade but that doesn't make a lot of sense unless business class is full).
On all other flights, recognition upgrades are single cabin (eg Economy to PE or PE to Business), on these other flights, it's possible to use two upgrades at once to jump directly from Economy to Business.
You don't need any special fare, it's possible to just buy the cheapest seat only ticket (must be an Air New Zealand flight number and ticket - no star alliance awards allowed!) and still be eligible for an upgrade, obviously, a seat only ticket doesn't include a bag however if you've applied for an upgrade (and even if you don't get the upgrade) you still get the baggage allowance as if you would have received the upgrade (so 3x 23kg bags). If you were after a works fare (to get a meal/drinks/movies) then it's still possible to add it via the website up until 4ish hours prior to departure.
Recognition upgrades are obviously a gamble, it's not guaranteed so don't expect a confirmed upgrade, the Air NZ website says these are confirmed up to 6 days prior to travel but in my experience, this is never the case (most are much closer to departure). In the past, I've even had some clear at the boarding gate when I was boarding.
It's also worth noting that they don't need to be applied within your status year, so if your gold status is expiring soon but you're not traveling for a few months you can still apply it to that flight (even if the flight date is after you've dropped in status).
A320/321 has no options for upgrade.
Completely unpublished but it's possible to use recognition upgrades for the A320/321 flights to upgrade from a seat/seat+bag/works fare to a works deluxe fare.
I've successfully done this a few times as that year I was not traveling on any 777/787 Air NZ flights and otherwise, the upgrades would have gone to waste. You can't do this online (must call) and generally they're confirmed about a week out from travel. A seat to works deluxe upgrade is ~$150 so it's not amazing value however given its "use it or lose it" it'll sometimes make sense to use them on the A320/321 flights.