Yes, it it the number of connections that are in use at that exact instant. "In Use" means that some thread is currently using that connection to communicate with the database.
Seeing the connections in use being only 0-2, even when a large number of users are using the app, is not unusual. First, not all users will submit requests concurrently (most are "thinking" and thus there are no requests from those users), and of the users who have active requests, not all of those will be actively using the database. And if you add in Hibernate or JPA, which cache some of the database data, you might have even fewer connections.
The best way to set the max connection is to observe the max in use connection count and set the max connection to that plus 10-20%.