I'll have to double check, but I believe the measurement is of the expended shell.
Correct. 3" is the chamber measurement, not the shell itself. Once it's fired, it fits the chamber exactly. That's why it's a bad idea to shoot 2 3/4" 16 gauge shells in a 2 9/16 chamber; not that you see too many 2 9/16 chambered guns anymore, but I suppose they are around.
My dad has two old 16 gauges and we were discussing heading out to the skeet range soon. how can i check the chamber size so i don't run into the 2 3/4" shells VS 2 9/16" chamber issue?
Depending on how old they are you might want to watch what ammo you feed them. Some of the older shotguns don't cope with modern ammo very well (pressure).