What does the red number 3 mean in the dock, I thought maybe it meant 3 application need updating but can not find any reference to that in the application.
This indicator does mean that there are three available updates for your system. If you open AppCenter and click on the "Installed" tab, you should be able to see what these are. If no updates do appear in AppCenter, you may try manually updating your system via the terminal and check if that changes anything. The command for this would be
sudo apt update && sudo apt full-upgrade