The confusion seems to be between 3x3 and 3x.
3x3 can mean that the sensor is combining 3 pixels in the horizontal and vertical axis. This is know as binning. Only the 5D mark III does this. All the other cameras, including the EOSM does what is called line skipping.
It is a little more complicated because of the bayer pattern on the sensor this but let's simplify it to illustrate what is going on.
Binning is making these nine pixels behave like one giant pixel while line skipping only uses the one pixel in the middle. Line skipping is much simpler but it does have aliasing issues. The net result from both of these methods is the same. Start with a sensor that has an active horizontal resolution of 5,760 pixels and a vertical resolution of 3,240 and you end up with a 1920x1080 image after doing 3x3 pixel binning or line skipping. Now the EOSM and most of the other Magic Lantern enabled cameras don't have that high of a resolution. The EOSM has a 5184 x 3456 (18 megapixels) sensor so the maximum resolution, assuming you want to keep the HD aspect ratio of 16:9 is 1728x972. How does it do 1920x1080 H.264 video? We're pretty sure it scales the image. How about 1280x720? It does a 3x5 pattern which means it skips (or in the 5D3 bins) 5 pixels vertically and again resizes in camera for H.264 but in raw you need to adjust the aspect ratio to un-squish it.
3x crop on the other hand uses all of the pixels, a.k.a. a 1x1 pattern. Since the pixels are closer together and there is no line skipping there is also less aliasing but a 1920x1080 image would use just a small area of the total sensor thus the "crop" in this video mode. You don't need a module to do this, it is either the "Movie crop mode" option or the digital zoom option. One thing I personally like about Movie crop mode when shooting H.264 is that it extends the effective focal length of your lens so that a 16mm prime lens can become a 48mm lens or adjusted to full frame if your brain thinks that way it would be like having about a 26mm and a 77mm lens in one. Sort of, not really, but good enough to make a point.
Uh oh, I mentioned zoom mode. This isn't as well known but if you tap the magnifying glass icon on the screen while in 1920x1080 mode in the Canon menu you can also get into a crop mode, confusing because it says 5x or 10x on the screen and you will get the same image no matter which setting you use. The big secret is that you can get an image up to 2496x1072 but it isn't all that practical to use.
The crop_rec module on the EOSM doesn't actually "crop" and it uses the 3x3 pattern. Thing is, it uses the raw buffer that is supposed to be used for mv720 mode which is normally a 3x5 pattern so as Danne pointed out it quickly runs out of vertical resolution, thus most shots you'll see from the crop_rec module on the EOSM are very wide screen aspect ratios.
Finally, to get back on topic, the EOSM can't use the full sensor in 3x3 mode which is known as mv1080 in the ML source code. We're trying but so far the only hack seems to be to record H.264 and raw simultaneously. You'll get lots of corrupt frames and a few beautiful ones that inspires us to keep trying to get this mode working on the EOSM.
So does this make everything about as clear as mud?
