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The degree-one generation condition for Proj ensures that the opens $D_{+}(f)$ for $f\in S_1$ cover $X$. Put $B=S_f$ and $R=B_0$. Multiplication by $f^n$ is an $R$-linear bijection $R\to B_n$ for every integer $n$, because $f$ is an invertible degree-one element. The convention $S(n{)}_d=S_{n+d}$ therefore identifies $\widetilde{S(n)}$ on this chart with the free rank-one $R$-module $B_n$, generated by $f^n$. Hence every twisting sheaf ${\mathcal{O}}_X(n)$ is invertible, including negative twists.

For the tensor product of sheaves, consider the natural mapIt is an isomorphism by degree-one localization of a graded module. Explicitly, a homogeneous tensor $m_a\otimes n_{-a}$ of total degree zero is represented on the left by $f^{-a}{m}_a\otimes f^a{n}_{-a}$. Multiplying a tensor factor by a homogeneous element of $B$ gives the same result after using the tensor relation, since that element is a degree-zero coefficient times a power of $f$. This defines the inverse. Since localization commutes with tensor products, the target is $((M{\otimes }_{S}N{)}_f{)}_0$. These natural chart maps agree on overlaps, soThe degree-one hypothesis matters: on general Proj constructions, twisting sheaves need not be line bundles. The local trivializations are also recorded in Stacks Project, Section 27.10.

Under the degree-one generation condition for Proj, cover $X=\mathrm{Proj}S$ by degree-one charts. The degree-one localization of a graded module identifies the two local modules in the displayed formula, using localization commutes with tensor products. The maps are natural and agree on overlaps, so they glue to an isomorphism of sheaves of modules. The analogous assertion can fail for general positively graded rings.

With the graded shift convention $S(n{)}_d=S_{n+d}$, this is the sheaf associated with a graded module $S(n)$. Under the degree-one generation condition for Proj, it is an invertible sheaf: on $D_{+}(f)$ with $\mathrm{deg}f=1$, multiplication by $f^n$ freely generates its local module for every integer $n$. Without that hypothesis, it need not be invertible. The twisting sheaf on projective space is the standard special case. Stacks Project, Section 27.10 records the hypotheses and local trivializations.