As VolvoGirl indicated, it's in the text that you quoted from IRS Pub 560:
For SEP and qualified plans, net earnings from self-employment are your gross income from your trade or business (provided your personal services are a material income-producing factor) minus allowable business deductions. Allowable deductions include contributions to SEP and qualified plans for common-law employees and the deduction allowed for the deductible part of your self-employment tax.
This derives from section 1402(a)(12) of the tax code which excludes from net earnings one-half of self-employment tax.
