If a page is in portrait mode with letter paper, why is the margin at 10.5 inches wide?

If a page is in portrait mode with letter paper, why is the margin at 10.5 inches wide?

As you can see in this video - http://screencast.com/t/7s2H8plbtOq

the margin is at 10.5 inches wide but for a portrait letter page, that margin should be no further out than 8.5 inches.