It is referring to the Pokémon in play; this isn't a new effect. So each of your opponent's
in play Evolved Pokémon have their highest Stage
currently in play returned to the opponent's hand. If your opponent has a
Magneton then it gets bounced, leaving just
Magnemite. If your opponent has a
Magnezone on top of
Magneton, the just
Magnezone gets bounced, leaving
Magneton on top of a
Magnemite. If your opponent has a
Magnezone on top of a
Magnemite via
Rare Candy, then
Magnezone gets bounced and it isn't as easy to put
Magnzone back into play the next turn.
It also will work on Mega Evolutions, BREAK Evolutions and Stage 1 cards Evolved from Restored Pokémon.
The big exception will be Evolutions put into play as "unevolved" cards. Yeah, confusing but it isn't as complicated as it looks. Cards
Archie's Ace in the Hole and
Maxie's Hidden Ball Trick can put an Evolution into play directly, but it doesn't count as being Evolved. It still counts as a Stage 1, Stage 2, Restored Pokémon or Mega Evolution (whatever is printed on that card) so effects that refer to such things still apply:
Training Center still adds HP to Stage 1 and Stage 2 Pokémon put int play in this manner. An effect that just says "Evolved Pokémon" won't.