Need clarification on the term "bleed"

I understand the term and what it's used for but I think I've been interpreting the measurement wrong. Business cards for instance. Most require an "1/8" bleed. So I set my contour to 1/8". I think I should be setting it to 1/16". Is that correct?

In my head I call that a 1/16" bleed instead of 1/8" because I'm think like how the contour tool works.

In the adobe world is it called offset instead? If so would it still be a 1/16" offset?