Parameter entities in internal subset

I haven't been here for quite a while, so hello to everyone.

As a way to learn git, I've been fixing some ancient bugs in my DTD 
Parser, and that has led me to the Joy of Entities. I understand the 
intent, but am missing a few details and the deeper I dig, the more my 
head spins.

Section 2.8 (Prolog and Document Type Declaration), has a 
well-formedness constraint: "PEs in Internal Subset: In the internal DTD 
subset, parameter-entity references must not occur within markup 
declarations"

Paragraph 2 of section 4.5 states, "The literal entity value as given in 
an internal entity declaration (EntityValue) may contain character, 
parameter-entity, and general-entity references" and goes on to state 
that parameter-entity references are replaced.

Since markup declarations include entity declarations, why doesn't 
section 4.5 contradict section 2.8?

Thanks,

-- Ron