MN1 section 3 (1) for toddler born outside uk

Hello. Me and my husband (both eea with permanent residence since 2016) are applying on Friday for Uk citizenship. At the same time we are applying for our 38 months old daughter with form MN1 under section3 (1). She was born outside the UK and we came back when she was 2 weeks old. We dont have permanent residence for her because she is only 3 and that requires 5 years of living here. Am i corect in applying under this section and what do I put on page 3 of her form under 1.3 re indefinite leave to remain here? I read that I dont have to fill section 3 at all, is that correct?
Thank you