Proof.
Recall that our definition of an étale morphism from a scheme into an algebraic space comes from Spaces, Definition 65.5.1 via the fact that any morphism from a scheme into an algebraic space is representable.
Part (1) of the lemma follows from this, the fact that étale morphisms are preserved under composition (Morphisms, Lemma 29.36.3) and Spaces, Lemmas 65.5.4 and 65.5.3 (which are formal).
To prove part (2) choose a scheme $W$ over $S$ and a surjective étale morphism $W \to X$. Consider the base change $\chi _ W : W \times _ X U \to W \times _ X U'$ of $\chi $. As $W \times _ X U$ and $W \times _ X U'$ are étale over $W$, we conclude that $\chi _ W$ is étale, by Morphisms, Lemma 29.36.18. On the other hand, in the commutative diagram
\[ \xymatrix{ W \times _ X U \ar[r] \ar[d] & W \times _ X U' \ar[d] \\ U \ar[r] & U' } \]
the two vertical arrows are étale and surjective. Hence by Descent, Lemma 35.14.4 we conclude that $U \to U'$ is étale.
To prove part (3) choose a scheme $W$ over $S$ and a morphism $W \to X$. As above we consider the diagram
\[ \xymatrix{ W \times _ X U \ar[r] \ar[d] & W \times _ X U' \ar[d] \ar[r] & W \ar[d] \\ U \ar[r] & U' \ar[r] & X } \]
Now we know that $W \times _ X U \to W \times _ X U'$ is surjective étale (as a base change of $U \to U'$) and that $W \times _ X U \to W$ is étale. Thus $W \times _ X U' \to W$ is étale by Descent, Lemma 35.14.4. By definition this means that $\varphi '$ is étale.
$\square$
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