They need to relax the matchmaking a bit, I've done like 20-25 BG's max on a new character and I'm already getting 10+ minute queues. Everyone wants balanced matches but waiting 10 minutes for a 3v4v4 deathmatch is pretty miserable.
No, it actually doesn't.
When someone on the team of three quits, it almost immediately fills back up to three, but never above three.
When someone on the teams of four drops, it fills them back up to four while leaving the other team at three.
It's broken. And it's always Fire Drakes. Watch for that next time it happens. It's a known and reproducible bug.