An external temperature derating can be achieved by placing a PTC type resistor at the IN_SET pin. A short trace length (few cm) to place the PTC resistor closer to the LEDs is uncritical. For extended trace length PCB ground shifts and potential disturbance may impact the current regulation accuracy.
As the voltage in the IN_SET pin is kept constant at 1.22V the change of the resistance directly correlates to the change in output current. The customer can select the PTC type resistor based on the required derating curve and nominal output current. Often also a normal fixed resistor is placed in series to the PTC to set a max current when the system is at low temperature. PTC resistors with nonlinear resistance curves allow to achieve a derating only from a certain temperature onwards (e.g. current constant up to 75°C and then derating). See for example EPCOS B5960x B59701.
General recommendation: no additional capacitance should be placed at the IN_SET pin.
