It is saying that if the Net area/Gross area of the flange or web in question after drilling the holes is less than 0.85, then you need to take it into account. If it's more than 0.85 no reduction in cross section is required.
Now, considering that the standard bolt hole size for say a bolted OWSJ is 9/16" and the typical beam flange width is 5 1/2-6", you get to 15% reduction in area extremely quickly. Typically you have matching holes on each side of the beam flange, therefore your flange needs to be a minimum of 7 1/2" wide for 9/16" bolts on each side of the web to not cause concern.
For webs it's the same argument, but often those bolts are 3/4" diameter and there are usually 3 in most beams of any depth, so for that argument your beam depth needs to be 15" minimum for 3 bolts at 3/4", but as soon as you go to a W16, generally the detailer puts in 4 bolts. A drafter here who's previous role was a steel detailer said she always was taught to show the same number of bolts as the first digit in the metric call off(edit: to be clear this was prior to the steeel connection design engineer looking at it, just for initial detailing), e.g. W310 & W360 put 3 bolts, W410 & W460 put 4, etc. So you really can't ever have a beam web that you don't need to consider the section loss based on that information.