Yep - 'small group' actually refers to how many posts a group RP has acquired. You're also allowed 2 threads per co-writer, but we recommend that if you take advantage of this, to label them in some way so that they are easy to identify as being part of the same group RP.
A 'large group' is an RP with three or more writers that has exceeded 1000 in-character posts. Should your group reach that, then message any Staffer with a list of what threads are included (this is where the labels come in handy), and you get a shiny sub-forum in the 'Large Groups' area.