It means you have to have different user templates folders for each version. Neither of them needs to be in the AppData folder.
Mine are all in my documents folder.
I have a folder called MS System Files.


It contains folders for each Word version.
Those folders each contain a (User) Templates folder as well as a Workgroup (Shared) Templates Folder (Labelled Shared Templates) and a Startup Folder.


Those locations are then identified as such for each version of Word in the File > Options > Advanced > File Locations.

It is not necessary to have separate Workgroup Templates folders nor Startup Folders. I do it because some of my Add-Ins in the Startup folders are only for one version of Word. I use the same workgroup templates folder for Word 2010 and 2013 so I do not need a shared templates folder in my Word 2013 folder. I have a shortcut to the Word 2010 folder for convenience.

The shortcuts at the bottom of the Word 2013 folder are for starting Word using command-line switches to start in safe mode or without Add-Ins. The reregistration one makes Word 2013 the default program for opening Word files.