when i open up the config file to edit the bp size, it has an area for max size. its set to 6 by default but when i change it to 3, the bp just shrinks to 1 row (9 slots)

What's the max permission size is that will be searched for, if you set it to 3 and your player has the permission backpack.size.6 it will fail to find a size permission as only backpack.size.1, backpack.size.2 and backpack.size.3 will be checked. The player always has the backpack.size.1 permission as long as he has the backpack.use permission. This results in the player having only 1 row.
The option is there to allow backpacks with more than 6 rows (with broken ui) or to improve performance on backpack open for servers that will never allow backpacks bigger than the set value. It is planned to replace the option once multi page support is added.