The answer to your question would be yes.
Yes, they are part of your main site AND separate sites.
The author of the report is (rightly) basing his recommendation on the fact that there is a fundamental difference between blogs and a business website. (I'm not talking about software, since WordPress can certainly be used for a business website, I'm talking about the mindset of the site).
In the report he suggests building a silo for each of the major categories of your topic. Then building content to support each of these silos on the main site.
Now he recommends creating a blog, which used correctly is a tool for creating social buzz and relationship building, as well as boosting rankings, for each of the silos of your main business site. These blogs would remain tightly focused on one topic and link to the articles in your business site's silo, as well as other relevant content.
Hope this helps, let me know if it is unclear.