Just a guess, but I reckon it doesn't account for things like kernel memory usage, such as caches and buffers. Assigning 100% of physical RAM to applications is probably going to have a Really Bad Outcome.

But the memory being used by the kernel has already been allocated by the kernel. So obviously that RAM isn't available.

I can understand leaving some amount free in case the kernel needs to allocate additional memory in the future, but anything near half seems like a lot!