Thanks for your question! You're basically correct; any time you reach "3" you would reset the track (there's multiple bubbles only so you don't have to erase so much). So at "3" you would have an encounter, and the extra "1" would roll over to the next set of three. Then, like you said, you would have an encounter on multiples of "3", and each room you backtrack adds "1" to the track. Hopefully I've explained that well enough! Feel free to alter any rule to suit your preferences, but it sounds like you're doing what I intended. I'm glad you're enjoying the game!