Numerology. It doesn't matter in what form the numbers are added, because the point is to keep adding until you end up with one number. With that 89 you'd next add 8 + 9, get 17, except he stopped too soon as the end number for that is 8 because then you add the 1 to the 7 next.

It's a method of divination. The last number is supposed to have some meaning. It was called arithmancy before the 20th century, it's a pretty old system.