Yes, that's what it means - inc, work 3 rows then inc in the next one which is the 4th. You're only supposed to be increasing 2 sts each time, just on the thumb stitches. This is the lower part of the thumb where it sticks out from the hand; you'll probably put these sts on a holder and finish the hand part only, then go back and do the top part of the thumb. When you say it's huge, do you mean length or around? Compare your gauge to the pattern gauge, it might be larger which will make the mitten larger.
sue- knitting heretic