With normal use, there is no need for the recovery mode of Homey. However, there are a few reasons you might want to do so:
Make sure Homey is powered on in upright position. Make sure Homey is powered on for at least half a minute before continuing.
To enter recovery mode, turn Homey upside down, and wait for the 10 second countdown to end. After the countdown, Homey is set to recovery mode and will ask you to go to setup.athom.com, similar to when you first installed Homey.
Go to setup.athom.com on a WiFi enabled computer and follow the onscreen instructions. Choose between deleting all data (for a factory reset), or to keep it, to continue using Homey. Using the wizard on screen, you can (re)link Homey to your preferred WiFi network.
If you don't want to link a (new) Athom account to Homey (factory reset), make sure to hold ALT on your keyboard when asked whether you already have an Athom account. Then click Don't connect an Athom account. Note: this works best using Chrome on Windows or OSX.
After updating and rebooting Homey without account, it will tell you to go to setup.athom.com to set it up. At this time, hold ALT on your keyboard and press Next to finish the factory reset.