What voltage reference is the pwm signal using in the QUADRUPLE HALF-H DRIVER SN754410NE?
The PWM signal is being scaled on the separate supply.  It doesn't have to be 5 volts.  Depending on what your application needs it can be anything up to 36 volts, assuming you're meeting the other power requirements and handling heat properly.

You're using small, low-power signals to control much higher-power outputs.  What they call logic is the control side.  The logic has a separate power supply, because that part of the chip always needs 5 volts no matter what.  

It's possible to power the logic side of the chip from the high-current supply, but that would mean finding some way to get 36 volts down to 5 inside the chip, which causes power dissipation, which causes heat, which reduces the amount of current you can use to do the useful work of driving the motors.  Motors also generate quite a bit of electrical noise, so having a separate supply helps to keep that noise out of your sensitive microcontroller.