A transaction gets its first confirmation when it is included in a block. Each new block on top adds one more. Three confirmations means the block holding it, plus two blocks after.
Probability, not a switch
Settlement in Bitcoin is not instant and final like a bank stamp. The chance that a confirmed transaction disappears drops very fast with each block added. One confirmation is enough for most everyday amounts; large amounts deserve more.
- 0 confirmations: announced only. Fine for a coffee among people who trust each other, risky otherwise.
- 1 confirmation: in the chain. Reversing it needs a lucky or powerful attacker.
- 6 confirmations: the long standing rule of thumb for large payments, about an hour.
- 100 confirmations: the wait before newly mined coins can be spent.
At NODES, every ring checks the new block against its own copy before passing it on: that check is what a confirmation stands on.