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Doesn't the hypothesis concern the possibility of civilisations a lot older than three million years, though?

The dinosaur fossils are at least from 65M years ago! If there is evidence, we'd see it in the fossilized records. The 3M figure was for stone tools, which was unexpected, but still they showed up. Any evidence of the existence of an advanced civilization tens or hundreds of millions of years ago that coincides with the dinosaurs would show up in the fossil records.

I’m not an expert, nor even a well-informed layman, but my understanding is they argue that fossilisation is extremely rare, rare enough for a civilisation that may have only lasted a few hundred years to slip through unnoticed.

See, for example, https://www.nature.com/articles/d41586-021-00984-2 — only 32 adult T. rex have been found [as of the date of the article], even though the species existed for two million years or so.

Are they overstating things?

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