Normally this means your overall height is also 3"
Here is an example: 

But some letterstyles have letters/numbers that drop down or raise up.  Here are a few examples: 

Since all letters/numbers must be at least 3 inches, on letterstyles that have letters/numbers that drop down or raise up, your overall size will be slightly larger than 3 inches.

What if you want something custom (ie - wavy, slanted, smaller/larger size)?  No problem.  After you order, email us the change (ie - "be sure to make the letters exactly...") and we'll be glad to make the change.