The part you mentioned about counting the servers is true. All servers (physical or virtual, no matter what is the underlying infrastructure or OS), as well as Kubernetes nodes should be accounted for; switches, firewalls, client machines ... as I am aware are NOT counted. This sum is then mapped to some value units with ratios set based on the software this license model is going to be applied to. The intention is to make this something like a fair-use licensing model. Number of log sources is not a topic for this.
As Karl mentioned, you should reach out to your IBM representative for an accurate calculation. This will give you an answer if (in your particular case) this is a more price-effective option vs the EPS/FPM metric or not.
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Dusan VIDOVIC
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