Beneath the player beacon, not inside, so the latter. It doesn’t mean you can’t dig “reserved” unplotted areas, it just means avoid digging directly beneath a beacon because of the risk of disrupting the player’s ability to enter and leave its beacon. It also mean, don’t hollow out so that the player would take massive fall damage if they would unassumingly remove one block of the lowest layer of their beacon…
Though, deliberately damaging another players beacon you have access to isn’t something you should do either. Personally I think it is vaguely covered by the statement: