Pretty sure you read their example wrong.
Figure out how hard your AoE will hit a single target.
It will hit up to 10 targets, for this maximum value.
So for the 1000 damage spell, you will hit 1-10 targets for 1000 each.
If you face 20 targets, then the (maximum) 10,000 damage this spell can deal, will be divided evenly.
Or 500 damage per target.
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