Missing it. Calculate the loads as if you were using a steel bolt to make the connection. Lets assume when you look up the load, species and joint configuration in the NDS tables that a 1/2" bolt would safely bear the load. 4D would be 4x1/2" for a 2" edge distance. Now use your 1" peg 2" off the edge. If the table shows that a 1/4" bolt will do the job then your minimum edge distance is 1", etc. The edge distance guidelines were so a bolt wouldn't split out the side of the joint, They assured that adequate meat was left around the bolt. That distance doesn't need to be greater than the bolt's requirement just because you chose to use a larger dia wooden peg. Making sense?
