Hemingway himself explains this principle in chapter 16 of his 1932 book, Death in the Afternoon. As he explained it, by omitting certain parts of a story, a writer actually strengthens that story. The writer must be conscious of these omissions and be writing true enough in order for the reader to sense the omitted parts. When the reader senses the omitted parts, a greater perception and understanding for the story can be achieved.
Let's apply Hemingway's "iceberg principle" to the endings of some of his most famous works. At the end of The Sun Also Rises, Jake Barnes and Brett Ashley contemplate a life together. At the end of A Farewell to Arms, Frederic Henry walks back to his hotel alone in the rain. At the end of For Whom the Bell Tolls, Robert Jordan awaits his impending death. The fate of these characters is never directly stated. Hemingway doesn't tell the reader that Jake Barnes and Brett Ashley will never be together. Instead, it is "pretty to think" that they could have had a damned good life together. Hemingway doesn't tell the reader what lies in store for Frederic Henry after he leaves his dead lover in the hospital. Does his walk alone in the rain represent emotional freedom or devastation? Robert Jordan is surely to die at the end of For Whom the Bell Tolls, but Hemingway leaves the reader with the image of Jordan's "heart beating" against the forest floor.
Hemingway disliked discussions regarding the symbolism in his works. The "iceberg principle," however, by its very nature, invites symbolic interpretations and I think Hemingway acknowledged this in his own subtle way. Fraser Drew once quoted him as saying: "No good writer ever prepared his symbols ahead of time and wrote his book about them, but out of a good book which is true to life symbols may arise and be profitably explored if not over-emphasized."