"Version 3 included Internet Mail and News 1.0 and the Windows Address Book. It also brought the browser much closer to the bar that had been set by Netscape, including the support of Netscape's plugins technology (NPAPI), ActiveX, frames, and a reverse-engineered version of JavaScript named JScript. Later, Microsoft NetMeeting and Windows Media Player were integrated into the product and thus helper applications became not as necessary as they once were. Cascading Style Sheets (CSS) were also introduced with version 3 of Internet Explorer."

IE was clearly playing catch up at that point, but one thing I do remember is that IE was acceleratig really quickly. And like you, I do recall IE3 being behind Netscape, but I also recall it being the first time I thought, "MS is on a trajectory to surpass Netscape shortly".