Actually, what you are seeing is standard behavior. When you set  a
limit for drafts, what you actually doing is setting a limit  for how
many versions  you will keep drafts for, not how many draft  versions
to keep. There is no way, that I know of, to limit the actual number
of drafts themselves.

For example. if you set SharePoint to limits to drafts to 3, it will
keep all the drafts for the current major version plus the previous
two major versions. You could 5 drafts of the current version, 15 of
the preceeding one and 25 for the one before that. Once you publish a
newer major version then all 25 drafts for the earlier major will be
trashed.