The definition I used above is stated explicitly by ISO- it's not a translation error. This is deliberate.
As I said I agree that it's not an intuitive definition- but if you work in ISO a lot (as I do) it becomes a very convenient-- as any reduced-material corner/edge form error uses the same terminology, regardless of the surrounding geometry. This makes explaining what you want, and defining problems across language barriers, much easier than it might otherwise be.
On some types of parts, it can also make dimensioning drawings much cleaner than the equivalent part would be if dimensioned per ASTM- every corner can use the same symbols and conventions, and that one symbol can contain a lot of information.
The root of the usage of 'undercut' to describe lesser material deviations from ideal geometric form is from the design of casting tools.