The description of the default value for vfs.zfs.arc_max in the handbook (section 19.6.1.) is inaccurate. I propose phrasing it as follows:

"The default is all RAM but 1 GB, or 5/8 of all RAM, whichever is more."

Here is the actual code defining these default in sys/cddl/contrib/opensolaris/uts/common/fs/zfs/arc.c:

        /* set min cache to 1/32 of all memory, or arc_abs_min, whichever is more */
        arc_c_min = MAX(allmem / 32, arc_abs_min);
        /* set max to 5/8 of all memory, or all but 1GB, whichever is more */
        if (allmem >= 1 << 30)
                arc_c_max = allmem - (1 << 30);
        else
                arc_c_max = arc_c_min;
        arc_c_max = MAX(allmem * 5 / 8, arc_c_max);