Given a differentiable manifold $M$ and some chart $(U, \psi)$ near $p$, we can consider the curve $\tilde{\beta}_i: t \mapsto \psi(p)+t e_i$, where $e_i$ denoted the standard basis in $\mathbb{R}^n$, $i \in \{1, \dots, n\}$. Now we can set $\beta_i := \psi^{-1} \circ \tilde{\beta}_i$ to get the corresponding curve on $M$ and we can define the corresponding tangent vector by
$$\left(\frac{\partial}{\partial x^i}\right)_{p,\psi} u := \left.\frac{d}{dt}\right|_{t=0} u(\beta_i(t))$$
for all $u \in C^{\infty}(M)$. We can quickly verify that this is indeed well-defined. A quick computation also shows that any linear combination of these vectors still lies in $T_pM$ and that they span $T_pM$. To show that they form a basis, it is left to show that they are linearly independent.
We have done a proof in class where at some point I must have made a typo or I simply fail to understand what is happening.
There exists a cutoff function $\rho: \mathbb{R}\to\mathbb{R}$ that is smooth and satisfies $$\rho(x) = \begin{cases}1 & x \in (-\frac{1}{2},\frac{1}{2})\\ 0 & x \in (-\infty, -\frac{3}{4}] \cup [\frac{3}{4},\infty)\end{cases}.$$ For $j \in \{1,\dots,n\}$ define $\varphi_j: M \to \mathbb{R}$ by $$\varphi_j(q) := \begin{cases} 0 & q \notin U\\ \left(\prod_{i=1}^n \rho \left(\frac{\psi^i(q)-\psi^i(p)}{\varepsilon}\right)\right)\psi^j(q) & q \in U \end{cases}.$$ Then, $\varphi_j \in C^{\infty}(M)$ and $$\left(\frac{\partial}{\partial x^i}\right)_{p,\psi} \varphi_j = \delta_{ij},$$ which implies that they are linearly independent.
Question 1: What is $\varepsilon$? In an earlier class we defined tangent vectors as linear maps arising as a directional derivative along some smooth curve $\gamma: (-\varepsilon,\varepsilon)\to M$ with $\gamma(0)=p$. This doesn't make any sense in the proof because we can choose $\varepsilon$ rather freely. I am pretty sure this must be a typo, so the real question is: What should the definition of $\varphi_j$ actually be?
Question 2: What does the function $\varphi_j$ do?
Question 3: Why does $$\left(\frac{\partial}{\partial x^i}\right)_{p,\psi} \varphi_j = \delta_{ij}$$ imply that the coordinate basis vectors are linearly independent?