I will try to answer to myself, and to other users like @adi2Intel who are still in trouble with this problem. In this answer I'll take IS25WP512M Quad Flash memory as reference (because this is the part number I'm interested to, but I think you may adapt this changes to another flash with little effort).
Datasheet link, for reference: https://www.issi.com/WW/pdf/25LP-WP512M.pdf
For what concerns eXecution In Place (XIP), I modified flexspi_nor_config_t structure as follows:

in particular I modified sflashA1Size to match my new 512Mb (64MB) flash size and I changed the first 32-bit word in commands LUT by substituting EBh command (24-bit addressing by default) with ECh command (32-bit addressing by default) and by specifing that 32-bits of address are following instead of 24-bits. After this, I also ensured BOARD_FLASH_SIZE in board.h matched my new flash size:

For what concerns the application (flexspi_nor_polling_transfer), I first adapted FLASH_SIZE definition in app.h to match my new flash size (notice that this macro will then be used to fill flashSize field in flexspi_device_config_t structure used in main.c to initialize FlexSPI peripheral, thus requiring flash size is in KBytes, not Bytes


and last but not least, I modified all commands in customLUT to use the 32-bit addressing version of the command originally used by the demo example, e.g. I replaced 03h with 13h for Normal Read Single Data Rate, 0xD7 with 0x21 for Erase Sector, etc. and every time I also specified an ADDR length of 32 bits instead of 24:



I hope this post will help someone else, as with NXP technical support I am sadly forced to admit that... we are all swimming in a big **bleep**hole.