They became more efficient at producing goods. For instance, fabrics could be created faster and more efficiently, to make the cost go down. That allowed more people to buy more fabric with better quality. Before the industrial revolution, the fabric was created by hand and it was a slow process. With machines entering the picture, the process is sped up dramatically.
This is one example where the standard of living went up. With a higher standard of living, the overall nation is better off. In other words, if more people are healthier and happier, then the nation overall is better off.