How to restore a single file using Time Machine?

You need to first access the Time Machine app and use it to navigate to the location of your file.

Don't retrieve documents from a TM backup by using the Finder as you are showing in the screenshot as you may end up with problems with that document. Read the Apple article @muguy linked in their first post.

Yes. See Restore items backed up with Time Machine on Mac - Apple Support

navigate to the location from which you deleted the file first.

You need to be in the location from which you deleted the file, not in the Time Machine directory. If you deleted from documents, open that folder. If you deleted from elsewhere, open that folder to start. Then follow the instructions in the link.