I agree the current text is ambiguous given how often folks refer to the newline escape sequence as a "newline", but it isn't wrong - it's just talking about escaping literal newlines in your source code like:

>>> "This is a \
... single-line string"
'This is a single-line string'

When this paragraph is being updated, it would be good to add a cross-reference down to the table of escape sequences later in the section.