I just dug around for this.
They refer to Dunhill's bowl sizes - somewhere along the way someone decided that Dunnys shapes and sizes were so right proper, that they be the "standard", and they got people to listen to them.
Sizes seem to reflect Dunhill's pipe numbering system and have stuck.
Keeping in mind that people use the numbers, but are not faithful to the dimensions that I can tell.
The numbers seem to be relative to me, after reading 8 threads on different forums.
Some hint that it's bowl size, some hint at overall size.
Conclusion - bigger the number, bigger the bowl.
But I am probably wrong.