How does Disk Utility wipe the disk it's executing on? Maybe I am misunderstanding the functionality as a whole but how does Disk Utility wipe the disk it's executing on? For example, if you were to erase yourself there would still be a hand left.
Disk Utility won't erase the partition from which your Mac boots.

Don't be confused by your ability to erase the boot "drive" while in Recovery mode. You are actually booting off a different partition on the same drive, one that is hidden, and this allows you to erase the boot partition.