The description use $p but it is never defined Mike Kay points out that it sould be position(). An earlier version appears at http://www.w3.org/TR/2005/WD-xpath-functions-20050404/#func-subsequence It seems that the resolution of bug http://www.w3.org/Bugs/Public/show_bug.cgi?id=1523 (see comment #5) was applied incorrectly
The Working Groups have discussed your comment and agree with the solution that you identified. We are marking this bug FIXED and, since you are a member of the Working Groups and are aware of this change, are also marking it CLOSED.
This will appear as erratum FO.E4