A theoretical physicist 'generally' relies on other scientists to do observations and experiments, they then take those observations and think about and develop a theory or framework that explains why those observations and experiments do what they do or are what they are.
An astrophysicist takes observations from astronomy and the physics knowledge in general and applies that to those observations, If the astrophysicist is developing their models and theoretical framework based on others observations then they are a theoretical astrophysicist.
Einstein for the photoelectric effect for example was an applied physicist in a lab observing the photoelectric effect, (discovering it), if he then developed a theoretical model to explain that effect at that point he is doing theoretical physics. (Getting him his Nobel prize).
Much of astrophysics is by necessity theoretical, as it is impractical (or impossible) to confirm the theoretical model because of physical limitations. In many cases you cannot fully apply the scientific method because testing the theory is practically impossible.
A part of theoretical physics is also trying to work out methods of testing and confirming a possible theoretical model.